The recent market rout has sparked additional economic challenges for countries heavily dependent on oil revenues, amidst the ongoing tariff tensions. The price crash of Brent Crude to $63 per barrel is creating fiscal difficulties for major oil producers in the Gulf region, Brazil, and Nigeria.
For these countries, an oil price of $60 is significantly lower than their budget breakeven prices. Saudi Arabia’s breakeven price is estimated at $91 per barrel by the International Monetary Fund (IMF), meaning its government may need to accelerate borrowing and delay spending on ambitious projects due to the low prices.
Kuwait’s economy remains in recession, with the IMF warning of “highly exposed” commodity price volatility. The country has recently approved a financing law that will allow it to return to debt markets after an eight-year hiatus.
Industry experts warn that the current oil price decline poses significant risks for these economies. Richard Bronze, head of geopolitics at Energy Aspects, stated, “The oil price drop we’ve seen over the last week has taken us into territory where for a lot of oil-dependent economies, it’s not going to be what they need to balance their budgets, nowhere close.”
For Russia, the oil market meltdown could pose economic risks, according to Central Bank Governor Elvira Nabiullina. She warned that escalating tariff wars may lead to a decline in global trade and demand for energy resources, potentially affecting Russia’s economy.
As the situation unfolds, countries heavily reliant on oil revenues will need to navigate these challenges while navigating the complexities of the ongoing tariff tensions.
Source: https://oilprice.com/Latest-Energy-News/World-News/Oil-Nations-Scramble-to-Avert-Economic-Crisis-After-Prices-Crash.html