Impact of low oil prices on oil exporting countries.

The report describes the importance of oil for oil exporting countries and analyses the potential economic effects that current low oil prices may have in their economy and political stability. Firstly, the report describes the main drivers that have led to the present low oil prices. Secondly, descriptive statistics are employed to show the exposure of the main oil exporting countries to the oil price, where GDP and government revenue is found to be closely correlated to the oil price. In general, several Sub-Saharan African and North African countries show high risk due to the high exposure of their economy and of their government revenue combined with limited reserves per capita. Secondly, the macro-economic effects of a 60% fall in the price of oil is analysed with the GEM-E3 model, which is an stylized representation of the oil market change over the last two years. The results show that such an oil price drop has different effects across oil exporting countries, unsurprisingly strongly correlated with export dependence to oil. For instance, a 60% fall in the price of oil could lead to a reduction of the GDP of Sub-Saharan Africa by around 8.5%. The final section discusses the migration patterns from the studied countries, as a proxy of what might happen be they destabilised because of a lasting low oil price.