Moody's expects upstream capital spending to drop by at least 20 percent -25 percent, leaving the oilfield services and drilling industry the most stressed sector in 2016, according to the company's press release.
"Furthermore, the potential lifting of sanctions against Iran could bring even more supply to the market in 2016, offsetting any expected declines in US production," Wood noted.
Moody’s emphasized that oilfield services and drilling companies in particular will take steps to minimize costs while adjusting to lower demand. The rating agency also noted that the oil and gas sector is likely to see a rise in defaults in 2016.
Oil prices fell by 34 percent in 2015, mostly because of a prolonged global oversupply. Brent crude reached an 11-year low last December.