The coronavirus epidemic and the sharp decline in oil prices will strain the economies of oil exporting countries in the Middle East and North Africa (MENA), the global rating agency Fitch Ratings said on Tuesday.
The agency warned that the recent sudden decline in oil prices puts additional pressure on these countries that have a "vulnerable public and external finances."
"A slump in tourism, weakening demand for non-oil exports, and financial volatility associated with the coronavirus epidemic could also pressure rating metrics in the region," Fitch added in a statement.
The agency said it estimates that a drop in oil prices of $10 per barrel would affect government revenues by 2% to 4% of gross domestic product (GDP) among Gulf Cooperation Council (GCC) countries.
"Among large African oil producers, the impact will be 1%-2% of GDP in both Angola and Gabon, and 0.5% in Nigeria," the statement read.
However, Fitch said countries like Angola, Bahrain, Iraq, Nigeria and Oman as well as Cameroon and Gabon, are more vulnerable "as weaker balance sheets and policy buffers will limit governments' capacity to respond to the oil price slump without putting pressure on their ratings."
For oil-producing GCC countries that have higher credit ratings, such as Abu Dhabi, Kuwait and Qatar, the agency said, "ample fiscal and external buffers will provide greater headroom to weather the shock."
The majority of these countries are OPEC members who could not help avoid the failure in making deeper and longer cuts in their production levels last Friday with Russia-led non-OPEC oil producing nations at the OPEC+ meeting in Vienna.
As a result, Brent crude fell to $31 per barrel on Monday to mark its lowest levels since February 2016, while its loss of over 30% was the largest single-day percentage decline since the Gulf War in January 1991.
Since most of these countries' economies are highly dependent on oil production and exports, a decline in oil prices is set to have a dramatic impact on their revenues.
Among these countries, Nigeria has the highest breakeven price at $144 per barrel -- the oil price required to balance the government budget.
While Bahrain needs oil prices of $96 per barrel to balance its budget, Saudi Arabia requires $91 a barrel, and Oman needs $82 per barrel.
Kuwait's breakeven price to balance its budget stands at $68 a barrel, followed by Abu Dhabi at $65 per barrel, and Qatar at $55 a barrel.
By Ovunc Kutlu, Sibel Morrow