Venezuela will be hit hardest by falling oil prices because of its troubled economy. The country had a budget deficit worth nearly 17 percent of its gross domestic product last year -- worse than the deficits in Greece and Spain at the height of the eurozone debt crisis, the Wall Street Journal noted. Foreign cash reserves are at their lowest levels in a decade. While President Nicolas Maduro denies his country is on the brink of defaulting on its external debt, both Lynch and McNally said the possibility is increasingly likely.
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 (IMF). For every dollar off the price of oil, the government loses as much as $700 million in estimated revenues per year, according to PVDSA, the state-owned oil producer.
The country “is really dependent on their oil revenues to provide the basics for the public, as well as their operating expenses,” Lynch said. “It’s not clear what else they can do to cope with” lower prices.
Even before oil prices began to dip, Iran’s energy industry was in a freefall. Western sanctions imposed in response to Tehran’s nuclear program have greatly reduced the country’s ability to export oil, and revenues are down nearly 50 percent since 2012. Iran, once the world’s second-largest producer, is now the fourth.
The government remains heavily dependent on oil revenues. To finance its spending plans, Iran needs prices around $136 a barrel, or 70 percent higher than current levels, according to IMF figures. Unlike Venezuela, however, the country does have a backup plan if oil prices remain depressed. President Hassan Rouhani could strike a nuclear agreement with the West by a late November deadline, which would likely result in eased sanctions and enable Iran to boost its oil sales.
But earlier this month, a spokesman accused the West of manipulating oil prices to batter Iran’s economy and undermine its negotiating position, according to Iranian media.
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.
Oil revenues fell by $604 million in September -- a 16.5 percent fall from the previous month -- due to sliding crude prices and production losses, the government said. If revenues dwindle further, Nigeria could suffer a cash crunch and the government could delay paying state employees. The Central Bank of Nigeria is considering tightening monetary policy, which would push up interest rates and raise investment costs.
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. “They’re not in as much trouble” as countries with weaker economies, Lynch said.
Still, Russia could slide into a recession all the same. Moscow gets more than half its budget revenue from oil and gas; for every $10 drop in the per-barrel price of oil, Russia loses up to $14.6 billion a year in revenues, according to Alfa Bank.
On top of that, its currency is weakening. The Russian ruble has slipped by more than one-quarter against the dollar since the start of the year because of falling oil prices and Western sanctions against Moscow over the conflict in Ukraine. Russia has so far spent $6 billion to prop up the currency, but to little effect. At the same time, President Vladimir Putin has promised to spend some $18.2 billion by 2020 to develop infrastructure and services in Crimea, the Ukrainian peninsula that Russia annexed earlier this year.
The drop in oil revenues and rise in spending could also weaken Putin’s assertiveness toward the West.
“So far, Putin has pursued his geostrategic interests while seemingly ignoring the economic consequences of those actions,” William Pomeranz, an expert on Russian policy at the Woodrow Wilson Center in Washington, said. But as Russia’s oil revenues dwindle, “eventually he will have to provide answers to the problems of the Russian economy. … It will force Putin to make difficult choices sooner.”
Some analysts predict Russia’s economy will grow by just 0.5 to 2 percent next year, compared with about 4 percent a year in the 2010-2012 period, the Economist noted.
State-owned oil-and-gas giant Petrobras has nearly tripled production at its “pre-salt” offshore oil fields since 2012, which has helped boost the firm’s overall production even as output at more mature fields declines.
Brazilian leaders are counting on that supply surge to boost profits, pay off debts and fund local schools and hospitals. But for each $1 drop in crude oil prices, Petrobras stands to lose more than $900 million of cash from potential oil sales, according to calculations made by Reuters.
If sustained, 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. At Brent crude’s current levels, Petrobras could forgo around $14 billion a year in potential cash from oil sales after royalties, Reuters calculated.
As in Brazil, cheaper oil could hamper the progress of Mexico’s long-awaited energy sector reforms. In August, President Enrique Peña Nieto approved a sweeping package of measures to allow private and foreign firms to explore for and produce energy in Mexico -- ending the 75-year-long monopoly of Pemex, the state-run oil company.
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. Pemex’s quarterly loss totaled $4.4 billion from July to September, compared to nearly $3 billion for the same period in 2013, because of cheaper oil and declining exports.
Mexico’s government also stands to lose a sizable chunk of public funding. Oil revenues from Pemex account for about one-third of the federal budget. For every $1 drop in the price of oil, Mexico loses about $300 million, the Financial Times reported.