Published on Oct 24, 2025
Credit Risk
Energy Sector
Petroleum Credit
AI
Risk Management
The energy sector has always been synonymous with volatility. However, the coming year presents a unique convergence of geopolitical uncertainty, evolving regulatory landscapes, and rapid shifts in supply and demand. For credit and payments professionals, navigating this environment requires more than just traditional risk models; it demands proactive strategy and enhanced due diligence.
As we look toward 2026, here are three key strategies that leading credit departments are implementing to safeguard their portfolios and support sustainable growth.
1. Re-Evaluating Counterparty Risk with Dynamic Data
Static, annual credit reviews are no longer sufficient. The financial health of a counterparty can shift dramatically in a single quarter.
- Move Beyond Financials: While balance sheets are crucial, leading firms are now integrating real-time operational data. Are their counterparties' drilling projects on schedule? Are their tankers moving? A sudden halt in operations is a more immediate red flag than last quarter's P&L.
- Sector-Specific Stress Testing: Run "what-if" scenarios. How does a 20% drop in crude oil prices affect your refining clients versus your E&P clients? Understanding this sector-specific contagion is key to identifying hidden portfolio risks.
2. Modernizing Performance Assurance
In times of uncertainty, reliance on performance assurance like Letters of Credit (L/Cs) and Parent Company Guarantees (PCGs) increases. However, the efficiency and cost of these instruments are under scrutiny.
- Digital L/Cs: Explore digital platforms that are streamlining the issuance and amendment of L/Cs. This can reduce processing times from weeks to days, freeing up liquidity for both you and your customers.
- The Rise of Non-Traditional Security: Be prepared for an increase in requests for non-traditional collateral. Have clear policies in place for evaluating assets, from secured reserves to supply chain financing arrangements, to remain flexible without increasing your risk profile.
3. Leveraging AI for Predictive Insights, Not Just Reporting
Artificial intelligence is moving from a buzzword to a practical tool in credit management. The real value isn't just in automating old processes but in creating new, predictive insights.
- Sentiment Analysis: AI-powered tools can scan thousands of news articles, regulatory filings, and even social media to gauge market sentiment around a specific company or project. This provides an early warning system for reputational or financial distress long before it appears on a balance sheet.
- Payment Behavior Forecasting: Instead of just reacting to late payments, AI models can analyze a customer's entire transactional history to predict the likelihood of a future late payment, allowing your team to proactively engage with that customer before they become delinquent.
The Path Forward
The challenges of 2026 are significant, but they are not insurmountable. By embracing dynamic data, modernizing assurance practices, and leveraging predictive technology, NPECA members can move from a reactive to a proactive credit strategy, confidently steering their organizations through the volatility ahead.