These countries are getting killed by cheap oil prices
The price is not right for many oil rich nations.
Oil is selling for roughly $83 a barrel on the global market. That's bad news for Iran, Nigeria, Venezuela, Russia, and Saudi Arabia, among others. They need the black stuff to trade at far loftier levels in order to balance their budgets.
Iran's budget, for example, is built on oil at $135 dollars per barrel, according to data from Deutsche Bank and Thomson Reuters compiled by DoubleLine Capital.
There's speculation that Saudi Arabia is refusing to cut supply in order to squeeze Iran. The two countries from opposing Islamic denominations are vying aggressively for dominance in the Middle East.
Budget squeeze: Low oil prices may force some governments to make tough cuts. Venezuela heavily subsidizes the cost of gasoline. A gallon usually costs drivers around seven cents, Terzic noted.
Already facing declining oil production, skyrocketing inflation, and dwindling foreign exchange reserves, the nation's socialist government may be forced to look at its budget to see what it can cut without roiling the public.
In Russia, finance minister Anton Siluanov is already talking about the need to cut spending by 10%. "The budget can not constantly have expenses that were made at different economic reality," he recently told the Russian parliament.
Russia has oil budgeted at $100, while Saudi Arabia will break even at $95 per barrel.
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