Oil producers seek to shore up finances amid crude price plunge

Yousef Saba - Reuters - 11/04
Oil-dependent governments are coming under pressure from the lowest crude prices since the COVID-19 pandemic, with officials preparing policy responses for a drop in revenue such as issuing more debt and reducing spending.
  • Brazil plans extra auction for offshore oil areas
  • Kuwait to tap international debt market for first time since 2017
  • Russia’s economy expected to contract further from oil price decline
  • Saudi Arabia stands ready for policies to keep fiscal position strong: spokesperson
April 11 (Reuters) - Oil-dependent governments are coming under pressure from the lowest crude prices since the COVID-19 pandemic, with officials preparing policy responses for a drop in revenue such as issuing more debt and reducing spending.
Brent crude plunged more than 15% in the days following U.S. President Donald Trump’s aggressive tariffs, as the escalating trade war between the U.S. and China spurred worries about recession and energy demand. The same week, the OPEC+ cartel put forward a plan to increase supply next month. Brent sank below $60 a barrel, falling to the lowest level since February 2021.

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Past oil price crashes have forced painful reforms for governments that rely on income from crude exports. A decade ago, when Saudi Arabia sparked a price war with the U.S. shale industry and Brent fell to $36 a barrel, Riyadh slashed spending and cancelled energy subsidies. Libya burned through central bank reserves and scrapped infrastructure projects while Iraq had to turn to international aid to stay afloat.
“The oil price drop we’ve seen over the last week has taken us into territory where for a lot of oil-dependent economies, it’s not going to be what they need to balance their budgets, nowhere close,” said Richard Bronze, head of geopolitics at Energy Aspects.
“For some of them, that puts at risk core public spending, raising the risk for political instability and unrest.”
Brazil is preparing an extra auction this year for stakes in offshore oil areas to boost revenue, according to four sources who were not authorized to s...
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