Three Oil Producing Nations Impacted By Oil Price Plunge

Plunging oil prices are hitting three oil-producing countries the hardest: Venezuela, Iran, and Russia. This article looks at each of them and evaluates how they will fare if oil prices do not rise, including their relationships to the U.S.

1 minute read

October 24, 2008, 12:00 PM PDT

By Irvin Dawid

More than any other nations, these countries used their oils wealth to gain regional influence and "to challenge United States hegemony."

"Now, the (oil) producers are experiencing a reverse oil shock," states oil expert Daniel Yergin. "As revenue went up, government spending went up and expectations of a continuing windfall led to greater and greater ambitions.

But such ambitions are harder to finance when oil is at $74.25 a barrel, its closing price Monday (10/20) in New York, than when it is at $147, its price as recently as three months ago."

Of the three,"Russia was better positioned to weather lower prices than were many other oil and gas producers. The country deposited a significant portion of its oil revenues into two stabilization funds, which totaled $190 billion at the beginning of this month. The Russian budget is pegged to an oil price of roughly $70 a barrel - most revenues exceeding that have gone to these so-called rainy-day funds."

From USA Today: "Falling oil prices pinch OPEC":

The recent plunge in oil prices threatens to trigger unexpected financial headaches for top producing nations, especially Iran and Venezuela.

USA Today: "Gasoline prices tumble despite likely OPEC cuts"

OPEC announced Oct. 19 "that members plan to announce a 'substantial' output cut at an extraordinary meeting that begins Friday (10/24) in Vienna."

FULL STORY: 3 Oil-Rich Countries Face a Reckoning

Tuesday, October 21, 2008 in The New York Times

Energy Government / Politics World Central and South America Europe Middle East United States Oil Prices OPEC Financial Crisis International Relations View More

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