While the constantly dropping oil prices have affected most of the global oil-producing nations, the problem is yet to see a worsening impact, say industry experts. Crude prices are now lingering around a six-year low and could be the cause of major political turmoil in a few oil-producing nations.
RBC Capital Markets has named five countries as the ones that are expected to be affected the most: Venezuela, Nigeria, Libya, Iraq, and Algeria.
Due to its present fight against ISIS, Iraq is facing its own unique set of problems that are complicated by the drop in oil prices. The country’s budget has shrunk quite a lot. The Iraqi government is attempting to approach its bond market for the first time in many years in order to compensate for US$6 billion in new debt.
Iraq’s revenues have been stronger due to a continued production of oil. The nation’s oil production reached a record 4.18 million barrels per day in July. The production in Q1 2015 was 3.42 barrels per day. The scenario has worsened after that for Iraq, as Brent crude has now gone under US$50 per barrel.
Fitch Ratings said Iraq might have to report a fiscal deficit beyond 10% for 2015. All of the nation’s savings could possibly be depleted by then. The savings were gathered when Iraq was selling oil at high prices.
The falling oil prices may also worsen the current crisis gripping Venezuela. The Venezuelan government’s cost of insurance has spiked up to its highest in 12 years. This is the largest indicator of the nation closing in towards defaulting. The nation of Libya, meanwhile, also continues to be ravaged by ISIS infiltrators.