Lower oil prices will pressure the credit profiles of crude oil exporting countries, Moody's Investors Service said in a statement on Tuesday.
The global rating agency said the severity of the credit impact of lower oil prices on oil- and gas-producing sovereigns will vary from country to country, driving divergence in their creditworthiness.
The pressure of the coronavirus outbreak on global oil demand and the collapse of the OPEC+ deal earlier this month has provided a profound shock to oil prices, although temporary one, it said.
"We don't currently see the oil price decline as the outcome of a structural shift in the oil market, and fundamentals support our medium-term oil price assumption of $50-$70 per barrel," said Alexander Perjessy, Moody's vice president and senior analyst. "However, in light of recent shocks, we have revised our assumptions for 2020 and 2021.
"The sovereigns most vulnerable to lower oil prices in 2020-21 are those with the highest reliance on hydrocarbons as a source of fiscal revenue and exports, and limited capacity to adjust," he added.
The agency said fiscal revenue and exports in Iraq and Kuwait in 2020 will decline by more than 10% of 2019 GDP compared to the previous predictions of the rating agency, in the absence of any change, such as a rise in oil production.
The report added that the decline will be 4-8% of GDP in Oman, Kuwait, Azerbaijan, Saudi Arabia, the Republic of the Congo and Bahrain while in Russia, Kazakhstan, Trinidad, Tobago, Nigeria and Gabon, it will be less than 3% of GDP.
Moody's said Oman, Bahrain, Iraq and Angola are the most vulnerable sovereigns, with high external vulnerability and limited capacity to respond to the shock.
"By contrast, stronger fiscal positions ahead of the shock buffer the credit implications for Qatar, Russia, Azerbaijan, Kazakhstan and Saudi Arabia. And robust sovereign balance sheets will support Qatar and the United Arab Emirates, and, to a lesser extent, Kuwait, Azerbaijan, Kazakhstan and Saudi Arabia," the agency added.
By Sibel Morrow