S&P Global warns $40 oil could leave Gulf close to junk - Reuters

S&P Global warns $40 oil could leave Gulf close to junk - Reuters:

A sustained drop in oil prices to $40 a barrel as the world weans itself of fossil fuels would cut Gulf exporters’ sovereign ratings by two notches over time, leaving the average credit score just above ‘junk’, S&P Global said on Sunday.

A report by the agency said a “hypothetical long-run stress test” where oil prices fell to below $40 by 2040 suggested the average rating of Gulf sovereigns could fall by two notches from ‘BBB+’ to ‘BBB-‘.

Hydrocarbons contribute, on average, 81% of central government revenues for Gulf sovereigns - the countries of the Gulf Cooperation Council plus Iraq - and the pace of economic diversification is expected to remain gradual.

Brent crude prices fell to almost $53 last week but have be averaging just over $60 since tumbling down from over $115 a barrel in 2014.