NAIROBI/LAGOS, April 15 (Reuters) – As crude oil prices fall sharply, analysts dey warn say emerging market oil exporters go suffer for e budget, thanks to U.S. President Donald Trump‘s policy changes. The drop in oil prices dey happen just after Trump announce sweeping tariffs on April 2, causing Brent crude to nosedive by more than 20% to four-year low within one week.
Despite the price recovery to around $66 per barrel from below $60, countries such as Turkey, India, and Nigeria wey dey rely on oil exports dem go face wahala. Countries like Gulf nations, Angola, and Venezuela go dey feel the pinch from reduced hard-currency revenues, investors talk. ‘Losers go feel the impact stronger than the benefits for importing countries,’ Thomas Haugaard, portfolio manager for emerging market debt at Janus Henderson Investors, talk.
Current oil prices dey below the average budget assumptions of $69 as predicted by Morgan Stanley, with Angola and Bahrain suffering the most sensitivity to the drop. Angola don already experience the effect; them pay $200 million last week after JPMorgan call on the southern African nation’s $1 billion total return swap, as per di finance ministry.
‘Di current situation don affect di commodities market and emerging market Eurobonds, including Angolan Eurobonds trading levels,’ di ministry tell Reuters. Angola dey navigate its high external debts with precautionary loans even as average yields on Angola’s dollar bonds don rise to double digits.
Di International Monetary Fund classify Angola’s debt as high risk, but di Angolan government maintain say their debt trajectory dey solid and stable. JPMorgan discuss say di crude price drop dey disrupt frontiers markets and Nigeria’s carry trade where investors wey dey purchase Nigerian Treasury bills dey fear di naira go lose value quickly against di dollar.
As di central bank dey increase its dollar sales interventions, dem dey try manage convertibility risks to avoid major market disruptions. Oil make up about 90% of Nigeria’s exports, with crude earnings suppose fund 56% of dis year’s budget. Finance Minister Wale Edun don talk say dem go need to revise budget assumptions as e don face serious changes.
Gulf nations such as Saudi Arabia and UAE fit withstand dis economic storm better, because of higher reserves and ongoing economic diversification efforts. Yet, revenue drops fit still hinder their ability to fund new projects. Monica Malik, chief economist at Abu Dhabi Commercial Bank, talk say di fall in oil prices dey positive for oil importing nations but dem still get significant challenges ahead from ongoing trade war implications.
Analysts dey closely monitor di effects of dis situation as di Federal Government dey implement new economic reforms for di forex market. With uncertainties and expected outcomes, di situation remain one to watch closely.
