Impact on Oil Producers
Algeria is heavily reliant on oil and natural gas export revenues. Declining oil revenues are a complicating factor for a country which is already experiencing severe economic and social tensions and has suffered an estimated 75,000 deaths resulting from a six-year conflict with the Islamic Salvation Front and the Armed Islamic Group.
Indonesia’s oil revenues were expected to falland in addition to the already dire economic conditions that Indonesia finds itself in as part of the Asian economic crisis.
Venezuela will be hit hardest by falling oil prices because of its troubled economy. Venezuela, the world’s ninth-largest oil exporter and holder of the biggest proven oil reserves, needs oil prices at around $120 a barrel — or 50 percent higher than today — to keep its economy afloat, according to the International Monetary Fund.
Petroleum accounts for nearly all of Nigerian exports, with 95 percent of the country’s foreign exchange earnings and 85 percent of its total revenues coming from crude oil sales. This lack of economic diversity makes Nigeria especially vulnerable to price swings, and Africa’s largest oil producer is already showing signs of suffering.
Falling oil prices will have a less dramatic impact on the Russian economy in the near term. The country has around $450 billion in reserves to hedge some of the effects of cheaper crude, and that cash could last for up to a year.
The price drop could also undermine Petrobras’ long-term plans for expansion. The company projected global prices would hover around $100 a barrel through 2030; a lower price would make it harder to fund new infrastructure and exploration projects.
As in Brazil, cheaper oil could hamper the progress of Mexico’s long-awaited energy sector reforms. But lower prices could affect investor interest in the kinds of large-scale projects needed to revamp the country’s sluggish oil and gas industries.Mexico’s government also stands to lose a sizable chunk of public funding.
The Gulf States, Libya and Iran
The Middle East and North Africa contain the highest concentration of oil-dependent economies in the world. The region accounts for nearly a third of seaborne crude oil and liquefied natural gas exports. The Middle East — specifically the Persian Gulf — also accounts for the majority of OPEC production and exports. Therefore, the Middle East is the region that is most exposed to volatility in global energy markets — and the region that can cause the most variation, as seen by Libya’s production fluctuations. A sustained drop in the price of oil below $90 per barrel could jeopardize the economic stability that many of the region’s energy exporters have enjoyed following the tumult of the Arab Spring.