The Economies Getting Hit by Low Oil Prices

Eric Gay / AP

Oil prices are still under $50 a barrel due to a glut in production and OPEC’s—the cartel of oil-producing countries—price war. Some say that the OPEC is winning: U.S. energy firms have been making cut-backs this summer due to losses from the low prices. It’s good news for U.S. consumers though: Labor Day gas prices are expected to be the lowest in 11 years.

But lower oil prices are almost definitely bad news for the governments whose budgets are dependent on them being high: Saudi Arabia, ostensibly the leader of OPEC, is facing huge budget deficits this year due to decreased oil prices. According to the International Monetary Fund (IMF), the deficit will be about $140 billion.

Canada’s economy has also made headlines as low crude oil prices meant that the Canuck GDP shrunk for first half of 2015—putting the country in a modest recession on the eve of an election.

Major oil-producing countries—that list includes Venezuela, Libya, Russia, Qatar, and Iraq—are all taking a hit. Each of these countries have a different threshold for how low prices can go before their budget goes into deficit territory, but according to calculations by the Wall Street Journal and the IMF—only Kuwait can break even at the current prices. (In Deutsche Bank’s estimates, no one survives.)

For now, it’s still unclear when the oil price war will end—some analysts are expecting low oil prices to last for a while. Perhaps what’s even more unclear is who will come out on top at the end of it.