Petrostates Hammered by Oil Price Plunge and Pandemic’s Spread - Bloomberg:
Kazakhstan’s long-standing leader calls it a “perfect storm.” Venezuela’s government is shutting fuel stations across the country. Chad is paying its sovereign debts using cattle.
Across the oil-rich states of Africa, the Middle East, Latin America and the former Soviet Union, leaders accustomed to a steady flow of petrodollars see trouble ahead as the oil price war promises to destabilize their economies -- and perhaps their hold on power.
Of course, it’s not just oil-producing countries that are suffering a dramatic economic shock as the coronavirus pandemic sweeps across the world, but for the world’s petrostates, the collapse in oil prices adds another layer of pain. The plunge in export income is putting pressure on currencies and pushing up bond yields just as the virus is ramping up the call on social spending.
“There’s no sugar coating: It’s going to be very difficult for producers,” said Russell Hardy, CEO of oil trader Vitol Group. “With the exception of a few countries with deep pockets, everyone is suffering. All oil producing countries will have to trim budgets and may have to look at financing.”
Kazakhstan’s long-standing leader calls it a “perfect storm.” Venezuela’s government is shutting fuel stations across the country. Chad is paying its sovereign debts using cattle.
Across the oil-rich states of Africa, the Middle East, Latin America and the former Soviet Union, leaders accustomed to a steady flow of petrodollars see trouble ahead as the oil price war promises to destabilize their economies -- and perhaps their hold on power.
Of course, it’s not just oil-producing countries that are suffering a dramatic economic shock as the coronavirus pandemic sweeps across the world, but for the world’s petrostates, the collapse in oil prices adds another layer of pain. The plunge in export income is putting pressure on currencies and pushing up bond yields just as the virus is ramping up the call on social spending.
“There’s no sugar coating: It’s going to be very difficult for producers,” said Russell Hardy, CEO of oil trader Vitol Group. “With the exception of a few countries with deep pockets, everyone is suffering. All oil producing countries will have to trim budgets and may have to look at financing.”
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