Latin American states to be hit most by oil price fall

The price of oil has dropped 15 per cent (Source: Getty Images)
Latin American petro-states face being hardest hit by the recent 15 per cent drop in price of oil to below $100 (£61) per barrel (pb), according to a new report released yesterday.

The report by research consultancy Capital Economics said lower oil prices could hit Latin American producers worst because many relied on higher prices to balance budgets.

The report added that higher debts levels Brazil, Mexico and Venezuela meant deficit financing might be difficult, and could force spending cuts.

Particularly badly affected would be Venezuela, the report suggested, highlighting that it would need an oil price above $200pb to balance its books, and is likely to face sharp spending cuts.

While noting big Middle Eastern oil producers stood to lose the most in absolute terms, conservative oil sector management means most could still balance budgets at a price as low as $70pb.

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