“We don’t currently see the oil price decline as the outcome of a structural shift in the oil market, and fundamentals support our medium-term oil price assumption of US$50-US$70 per barrel,” said Alexander Perjessy, a Moody’s vice president – senior analyst.
“The sovereigns most vulnerable to lower oil prices in 2020-21 are those with the highest reliance on hydrocarbons as a source of fiscal revenue and exports, and limited capacity to adjust,” Perjessy said.
Moody’s estimates that fiscal revenue and exports would decline by more than 10 per cent of 2019 GDP in 2020 in Iraq and Kuwait compared with the rating agency’s previous projections, in the absence of any adjustment, such as an increase in oil output. In Oman, Qatar, Azerbaijan, Saudi Arabia, Republic of the Congo and Bahrain, the fall would be 4 per cent-8 per cent of GDP, the ratings agency said.
The most vulnerable sovereigns are Oman, Bahrain, Iraq and Angola, where external vulnerability is high and capacity to adjust to the shock is limited.