Oil's Next Casualty: Government Budgets
The 56 percent drop in oil prices in the last six months is fueling more than just jet engines and road trips. It's also burning through the cushy budget surpluses enjoyed by some of the world's biggest oil-producing nations.
Saudi Arabia, the world's top producer of crude, will see the budget surplus it has enjoyed in the past turn into a deficit of 4.7 percent of gross domestic product this year, according to the median estimate of eight economists surveyed by Bloomberg. That would be the first shortfall since 2009, according to International Monetary Fund data.
The Middle Eastern nation, which derives about 90 percent of its budget revenue from oil, recorded a surplus of 8.7 percent of GDP in 2013. (Data for 2014 surpluses or deficits aren't yet available in many countries, so we're using 2013 for comparisons.)
- QuickTake: Oil Prices
Oil exporters Kuwait, Qatar and the United Arab Emirates will also see their surpluses take hits this year, according to the Bloomberg surveys, which were conducted in December and January.
Russia, which has seen seen the effects of sanctions by the U.S. and European Union compounded by the drop in oil prices, is forecast to see a budget shortfall of 2.3 percent of GDP, wider than the 0.85 percent in 2013.
For countries that are net importers of oil, though, the budget outlook looks brighter. Japan will be able to shave a budget deficit amounting to 9 percent in 2013 to 6.8 percent this year, Bloomberg's survey found, as its central bank embarks on record stimulus. The U.K., which only became a net importer of fossil fuels in 2013, according to the U.S. Energy Information Administration, will narrow its budget deficit to 4.2 percent of GDP from 5.9 percent two years ago, analysts figure.
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