Oil Price Crash: Top 5 At-Risk Countries
Since June 2014, global oil prices have dropped by more than 50%. The drop could strongly affect the economic and political stability of these five oil exporting countries.
Oil prices make winners and losers. In general, oil importers will gain from low prices, while most oil exporters will suffer. Still, there are differences. While the United States, Norway, and the Gulf States can protect themselves with diversified economies and high hard currency reserves, the oil shock could bring some countries to the verge of economic default and political crisis.
Venezuela
Venezuela entered the period of low oil prices with an already frail economy ruined by the more than a decade-long socialist regime of Hugo Chavez and his successor Nicolas Maduro. The oil price slump significantly worsened the country’s already failing economy.
More than 90 percent of Venezuela’s exports and hard currency reserves depend on oil, and with the price of oil 50 percent down, the country is close to a default.
Standard & Poor’s is the last in a line of rating agencies that downgraded Venezuela’s credit rating to junk status and the country’s currency is experiencing a constant devaluation trend. At the same time, inflation is expected to rise to 200 percent this year and the economy to shrink by 7 percent.
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