Oil prices continue to reach new lows. While gas prices below $2 a gallon have benefited American businesses and consumers, countries around the world are feeling the burn of the historically low prices, largely because they don't have any other industries to support their economies. What are the five most oil-dependent economies in the world? Unsurprisingly, many of these states are politically unstable, and becoming more so with falling prices.
Oil accounts for 96% of Venezuela's exports and more than 40% of government revenues, leaving the nation's fortunes inextricably tied in with the price of oil. Venezuela has more proven crude oil reserves than any other nation in the world. Like Saudi Arabia, it has the reserves to maintain a huge market share should oil prices ever rebound. But the Saudis hold over $600 billion in foreign reserves, affording them a much greater ability to manipulate currency. Venezuela, meanwhile, holds only about $15 billion, leaving it largely unable to contain the current currency inflation. (For more, see: What Determines Oil Prices?)
Libya is all but a single-industry economy, with the energy sector accounting for 65% of GDP and a staggering 95% of government revenue, according to the CIA. Moreover, most Libyans work for the state, tethering consumer checkbooks to the price of oil. This complete dependence is largely manipulating the current civil war, with the rival governments battling for control of the state-owned National Oil Company (which is currently, by U.N. resolution, supposed to deal with both governments). The dependence on oil both exacerbates Libya's current political struggles and amplifies the risk of further price slides.
Ostensibly the most developed and diversified economy on this list, falling oil prices have exposed Russia's continued dependence on energy exports. The ruble (RUB) was absolutely crushed last year, and Russia burned through sovereign wealth funds bailing out both oil companies and banks. Russia's new gas deal with China won't pay dividends for years, and the country is languishing under the weight of Western sanctions. Russia's economy is weakening in almost every respect, with the current oil crisis largely to blame. (For more, see: Top OPEC Competitors and How OPEC Controls Them.)
The dominant oil industry accounts for more than 50% of Angolan GDP and more than 70% of government revenue. Angola is resource-rich in other sectors, especially mining, but is still recovering from a bloody civil war that ended in 2002, and doesn't have the infrastructure to effectively exploit many of these resources. The government, determined to maintain solvency in the midst of falling prices, introduced new austerity measures in 2015, but oil prices have collapsed far beyond the projections for that budget, leaving the state vulnerable.
Like most of the other countries on this list, Kuwait relies on oil for more than half of its GDP and almost all of its export revenues. While Kuwait has some comparative advantages (it enjoys relative political stability and has substantial foreign currency reserves relative to its GDP), Kuwait's recent efforts to stimulate growth in other sectors have fallen flat. With foreign investors hesitant to commit money to the tumultuous Middle East, Kuwait is likely to remain a single-industry economy for some time.
The Bottom Line
What do these states have in common? All of them are politically fragile, or afflicted by conflicts internal and external. With so many troubled nations depending so completely on the price of oil, a continued slide in prices may beget further global instability in 2016.