Nigeria In Top 5 Countries Being CRUSHED By Oil Price Slump

As global prices continue to plunge, bringing uncertainty for oil producing countries and their citizens, CNN has examined the five countries most affected by the downturn, and Nigeria is one of them.

Countries producing crude oil are getting crushed.

Huge budget surpluses are turning into deficits, and generous social programs are being replaced with austerity and cuts.

Oil has collapsed below $37 a barrel, compared to over $100 in mid-2014. The global oil glut, OPEC’s determination to pump like there is no tomorrow, and slowing demand from China and other countries are pushing oil prices to new lows.

Here are the five countries hit the worst.

NIGERIA

Africa’s biggest oil producer is in trouble. Oil accounts for roughly 75% of Nigeria’s government revenue, and almost 90% of the country’s exports.

The plunge in oil prices has left the government unable to pay its bills and in some regions state employees haven’t received their salaries in months.

The country is suffering from power cuts and fuel shortages.

VENEZUELA

Venezuela has the world’s largest oil reserves. Its government has  used the money it makes producing oil to pay for pensions, health care, social benefits and  subsidize housing and grocery stores.

However, the economy is on the brink of collapse.  Inflation soared over 150% in 2015 and is expected to rise over 200% next year. The government is unable to pay its bills, and food and basic supplies are in short supply.

The economic downturn has led also led to political turmoil, and the country’s opposition won a majority in an election for the first time in 17 years.

SAUDI ARABIA

Oil accounts for 75% of Saudi Arabia’s revenue and the country’s finances troubled. The government ran a nearly $100 billion budget deficit in 2015 and announced tough cutbacks for next year.

“That’s a reminder that even the world’s lowest-cost oil producer relies on high(er) prices to balance its budget and current prices don’t come anywhere close,” Kit Juckes, global strategist at Societe Generale, said.

RUSSIA

Nearly half of Russia’s government revenue comes from oil and gas exports. The plunge in oil prices came when Russia was already suffering because of Western economic sanctions, imposed on Moscow over its involvement in Ukraine.

Russia’s budget is based on an oil price of $50 per barrel, but oil is trading around $37. The International Monetary Fund expects Russian GDP will shrink by 3.8% this year and by another 0.6% in 2016.

IRAQ

Low oil prices are crushing Iraq’s finances when the country desperately needs income to fund its war against the so-called Islamic State.

Iraq has been pumping record amounts of oil this year, but the increase in production hasn’t compensated for the drop in prices. The country has huge oil reserves, but needs more investment in infrastructure to access it.

READ ALSO:  Tax Holiday – How Nigeria Lost $3.3 Billion To Foreign Oil And Gas Firms

Nigeria’s economy remains heavily dependent on the oil industry and remains characterised by a relative lack of economic diversification.

This also means that the country’s currency, the Naira, remains dependent on oil prices, and recently slumped to a record low of N307 to USD1 on the parallel market.

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