Governments reliant on oil revenues are bracing for economic turbulence as crude prices plummet to their lowest levels since the COVID-19 crisis, with Brent crude sinking below $60 a barrel, according to Reuters.
The sharp decline, triggered by escalating US-China trade tensions and OPEC+’s surprise decision to boost supply, has forced producers from Riyadh to Rio to draft emergency measures, including debt issuances, spending cuts, and stalled megaprojects.
The crisis erupted after US President Donald Trump imposed aggressive tariffs, sparking fears of a global recession and crushing energy demand. Concurrently, OPEC+ members, including Saudi Arabia, announced plans to increase production, exacerbating the glut.
Global ripple effects
Rio de Janeiro’s governor, Claudio Castro, warned of austerity measures after oil prices fell below the budget’s $80.79/barrel assumption. An emergency offshore oil auction is planned to offset losses.
With its 2025 budget pegged to $69.70/barrel, Moscow may face renewed stagflation. Pressure mounts on the central bank to cut rates despite inflation.
Already crippled by US sanctions, Venezuela and Iran confront existential threats. Venezuelan President Nicolas Maduro has slashed public sector hours, while Iran’s budget–set at €57.50/barrel–hinges on China defying Trump’s tariffs.
Meanwhile, Kuwait passed a law to resume international borrowing after a 7-year hiatus, whereas Nigeria’s reliance on oil for half its revenue may force painful borrowing or cuts. Iraq, requiring $70+/barrel to fund post-war rebuilding, could halt infrastructure projects.
The havoc echoes the 2020 price war, when Brent hit 65/barrel and firms like Latigo Petroleum warned of a “double whammy” similar to the collapse caused by the pandemic.
