Oil-exporting EMs’ net oil exports to halve in 2020

Oil-exporting EMs’ net oil exports to halve in 2020

BAKU, Azerbaijan, May 19

By Leman Zeynalova – Trend:

The sharp fall in global oil prices will have significant economic effects across Emerging Markets (EMs), with some countries pushed into crisis and others receiving a much-needed cut to their import bill, Trend reports citing Fitch Solutions.

“Given the scale of the fall in oil demand, we doubt that OPEC+ supply cuts that took effect on May 1 2020 will be enough to spur a meaningful recovery in oil prices. We expect that Brent crude will end the year at about $40/bbl, with prices averaging $33/bbl over the course of 2020. With both prices and export volumes lower than in 2019, energy exporters will see a sharp fall in their income,” the company said in its report.

Fitch Solutions estimates that this shift in oil prices and volumes will reduce major oil-exporting EMs’ aggregate net oil exports by about 51 percent, cutting their incomes by $500 billion.

Saudi Arabia and Russia will, unsurprisingly, face the biggest losses, according to the company.

“We expect that both countries will receive about $100 billion less in oil exports this year than they did in 2019. When measured as a share of GDP, however, lower oil revenues will probably weigh much more heavily on smaller economies such as Angola and Iraq. These countries will each see revenue fall by over 20 percent of national output in 2020, marking a significant hit to their economies,” reads the report.

The hit to aggregate income will, proportionally, be much smaller in countries with more diversified economies like Brazil or Malaysia, according to Fitch Solutions.

“The fall in exports will cause oil exporters’ current account positions to deteriorate. The decline in consumers’ incomes will also, of course, reduce import demand, but in most cases this will not be enough to offset the decline in exports. In countries – like Colombia or Nigeria – that were already running large current account external deficits, shortfalls will likely widen,” reads the report.

This will add to pressure on oil exporters’ currencies, many of which are pegged to the US dollar.

But while the Nigerian naira, Angolan kwanza, and Brazilian real will probably continue to weaken, we are confident that governments in the Gulf have the resources necessary to protect their pegs. Oil Importers To Benefit From Lower Prices While low energy prices will be painful for oil exporters, many other EMs will benefit from cheaper energy costs, which will reduce their import bills. Low oil prices are, in a sense, a transfer of wealth from producers to consumers,” reads the report.

If oil demand remains at 2019 levels, Fitch Solutions estimates that the EMs would save a total of $330 billion off their net import bills this year.

“The actual fall in the value of oil imports will probably be bigger – we estimate about $360 billion – because of a fall in the volume of oil consumed. This windfall is not as large as the $500 billion fall in exports that oil exporters are likely to see, suggesting that, net, EMs will lose out,” reads the report.

Within a given economy, the distribution of this windfall will also depend on domestic energy market, according to Fitch Solutions.

“In countries where fuel prices are market-determined (like Poland) the benefit of lower costs will flow directly to consumers, reducing prices and boosting disposable income. In more regulated fuel markets (like Nigeria) lower prices will allow the authorities to phase out subsidies. They could even boost government revenue if the government maintains prices at pre-crash levels and pockets the difference,” reads the report.

---

Follow the author on Twitter: @Lyaman_Zeyn

Subscribe to Trend in Google News! Subscribe
Trilateral meeting of Deputy PMs of Azerbaijan, Armenia and Russia held in Moscow
Trilateral meeting of Deputy PMs of Azerbaijan, Armenia and Russia held in Moscow
Russian peacekeepers - guarantors of peace in Karabakh - President Putin
Russian peacekeepers - guarantors of peace in Karabakh - President Putin
Russia welcomes recent meeting between religious leaders of Azerbaijan and Armenia
Russia welcomes recent meeting between religious leaders of Azerbaijan and Armenia
Loading Bars
Latest
Azerbaijani Navy officers successfully completes internship in Turkey (PHOTO)
Military training session to be held in military unit of Azerbaijani MoD
At least 25, including minors, died in illegal refinery blast in Nigeria
Iran’s RCS receives 30th batch of COVID-19 vaccine
Mandatory vaccination issue to be solved in November, NCDC Head says
Some 16.03 million voters cast their votes in the presidential elections in Uzbekistan
Tug fights container fire on cargo ship off British Columbia
Tokayev arrives in Ashgabat for state visit
Voting in presidential elections in Uzbekistan ends
Growth of Uzbekistan’s real GDP makes almost 7% over 9 months
No mandatory vaccination in Georgia, PM vows
Uz-Kor Gas Chemical opens tender to attract services for int'l goods transport
Azerbaijan shares data on number of vaccinated citizens
Azerbaijan confirms 2,036 more COVID-19 cases, 1,045 recoveries
Azerbaijan's executive power in Aghdam opens tender for road overhaul
Inflation rate in Iran increases
Renewable energy dev't envisioned in Azerbaijan's national priorities - minister (PHOTOS/VIDEO)
UK says substantial differences remain with EU over Northern Ireland trade
Israel, UAE sign 'green corridor' agreement for vaccinated passengers - Israeli consulate in Dubai
Turkmenistan to connect grids of its Akhal, Balkan regions with new high-voltage line
Iran reveals COVID-19 data for October 24
Relations between Iran and Azerbaijan to continue based on mutual respect - Iranian FM
Kazakhstan boosts revenues from transporting cargo by air
Azerbaijan sees rise in total assets of local banks in September 2021
Georgia reports 3,436 coronavirus cases, 4,483 recoveries, 43 deaths
Azerbaijani MoD publishes video on events that took place last year this week (VIDEO)
Uzbekistan's CEC talks voters turnout as of 11.00
Total value of mortgage loans issued by Azerbaijani banks up in 9M2021
Prices of potatoes change in Uzbekistan
First VP Mehriban Aliyeva shares photo from visit to Zangilan with President Ilham Aliyev (PHOTO)
Daily COVID-19 case count at 1,677 in Kazakhstan
96 new positive cases of coronavirus detected in Kyrgyzstan
Azerbaijani banks increase issuance of consumer loans
Presidential elections kick off in Uzbekistan
Cargo ship on fire, spewing toxic gas off Canada’s Pacific coast: Officials
Tesla hikes price of Model X, Model S variants by $5,000
IRICA shares data on import of COVID-19 vaccine to Iran
Japan keen to invest in restoration of Azerbaijan's liberated lands
1,677 more COVID-19 cases reported in Kazakhstan
1 dead, 7 injured in shooting at off-campus party near Georgia university
Tesla posts a $1.62 billion profit in Q3 despite difficult car market
198 illegal migrants rescued off Libyan coast
10 envoys to be declared persona non grata: Erdogan
UN's Guterres welcomes Saudi Arabia's climate initiatives in call with King Salman
Presidential elections to be held in Uzbekistan
UK says substantial differences remain with EU over N.Ireland trade
New migrant caravan in Mexico pushes past blockade to head north
Aramco aims for net zero emissions from operations by 2050, CEO says
U.S. administers nearly 413 mln doses of COVID-19 vaccines
Chronicles of Victory: Azerbaijani president gives interview to Le Figaro newspaper on October 24, 2020 (PHOTO/VIDEO)
Chronicles of Victory: October 24, 2020
Buy/sell operations at Iran Mercantile Exchange growing
Iran unveils details of its trade turnover via Astara customs
Putin invites Israeli prime minister to visit St. Petersburg
Iran's Energy Exchange announces products to be on sale on October 24
Turkmenistan launches production of new types of paving slabs
Azerbaijani banks ramp up business lending since early 2021
Georgia and Ukraine talk cooperation within European integration
Iran reveals COVID-19 data for October 23
UK records another 44,985 new coronavirus cases
Tactical-Special Exercises of Azerbaijani Special Forces end (VIDEO)
First Vice-President Mehriban Aliyeva shared photos from Aghali village of Zangilan district on her official Instagram page (PHOTO)
Azerbaijani, Iranian FMs talk recent relations developments
Members of Nizami Ganjavi International Center join call towards cop26
Arayik Harutyunyan's visit to Russia is solely private - embassy of Azerbaijan
NATO not ready for equal dialogue with Moscow - Russian defence chief
Saudi-led coalition says destroys Houthi vessels, bomb-laden boats site
Kazakhstan updates forecast for completion of grain harvesting
IRENEX shares data on sales of Sepahan Oil Company in energy exchange
EIB to help reduce COVID-19 effects on Georgian SMEs
Moscow comments on reports about holding Russia-Armenia-Azerbaijan summit on Nov.2021
Azerbaijan shares data on number of vaccinated citizens
Azerbaijan confirms 2,315 more COVID-19 cases, 981 recoveries
First Vice-President Mehriban Aliyeva shared footage from Zangilan visit on her Instagram page (VIDEO)
Turkmenistan to participate in EXPO-2025
Georgia and Ukraine sign protocol on economic cooperation
Weekly review of key events in Azerbaijan's ICT sector
Azerbaijan's liberated lands to contribute to expansion of TRACECA corridor - minister
Weekly review of main events in Azerbaijan's transport sector
Saudi Arabia targets net zero emissions by 2060
Russia registers an all-time high of 37,678 coronavirus cases in past day
Uzbekistan eyes foreign technology for better local polymer production
Turkmen delegation to pay working visit to Iran
Azerbaijan records growth in loan portfolio of local banks in 9M2021
Turkmenistan’s Turkmenbashi refinery eyes producing hydrogen
Azerbaijan, Singapore to co-op in construction of geostationary satellites
IRICA shares data on Iran's trade turnover with SCO member states
Iran sees increase in exports of non-oil products from Hormozgan Province
Weekly review of Azerbaijani precious metals market
Kazakhstan unveils trade indicators with its TOP-3 EU partners
Turkmenistan approves new procedure for allocating investments from Stabilization Fund
Azerbaijani MoD observes exercises in liberated Lachin district (VIDEO)
Russian Health Ministry greenlights joint COVID-19 and flu vaccination
Central Bank discloses volume of loans issued to Azerbaijan's districts
Georgia records surge in tourist visits from Uzbekistan
Tourist inflow from Kazakhstan to Georgia soars
Iran boosts exports through customs of Zanjan Province
Azerbaijan notes decrease in banking sector' profit
Azerbaijan sees rise in mortgage lending
Iranian currency rates for October 23
All news