Russia and Venezuela are expected to be the hardest hit by tumbling oil prices while Mexico and Saudi Arabia remain well positioned to weather slumping prices, a new report by Moody’s concluded.
The report said oil exporters who rely heavily on oil revenue but have the lowest capacity to “make necessary policy adjustments” when prices slide will have their coffers strained by low prices.
“Russia and Venezuela would fall into this category because they derive a large share of revenues from oil and have large recurring expenditure that may be politically challenging to cut,” Moody’s said.
Analysts have suggested Venezuela could face a severe budget crisis if oil prices continue to fall.
The Russian ruble has been plummeting since western sanctions were imposed earlier this year.
The Kremlin said Tuesday it spent $4.35 billion during the last week to prop up the ruble as the threat of a recession looms, BBC said.
The World Bank has warned Russia’s economy could contract by over 7 percent if oil prices remain low.
Saudi Arabia and Mexico are “well prepared” to deal with weak demand and prices, even if prices fall under $60 per barrel.
Mexico has “comparatively limited exposure” to oil in its external accounts, a position aided by the country’s conservative budget policy.
Although Saudi Arabia, OPEC’s largest producer, is more vulnerable to price shifts its ample reserves and strong balance sheet should keep the country afloat despite anemic prices, the report said.
Struggling OPEC producers have called on Saudi Arabia and other large producers to curb output.
Saudi Arabia has rejected those requests and refused to change its output forecast at OPEC’s last meeting in November.
Moody’s base forecast for Brent Crude prices is currently at $80 to $85 per barrel, down $20 from its May forecast.