In the face of dwindling oil price per barrel, many oil-producing countries would be moving with the tag oil rich but cash poor.
Azerbaijan and Nigeria tops the list of oil-producing nations that has asked for international financial aid in January, 2016 as the price of oil fell below $30 per barrel.
OPEC member Nigeria has asked the World Bank and African Development Bank for $3.5 billion in emergency loans, the Financial Times reported on Sunday, to fill a growing gap in its budget. It’s not alone in needing help with its request for aid; coming hot on the heels of oil producer Azerbaijan’s request to the International Monetary Fund and World Bank for financial support.
The slump has been caused by global demand failing to keep amid a glut in oil supply and has been exacerbated by the 12-member oil-producing group OPEC’s decision not to cut production as it tries to drive out rivals such as the shale oil industry in the U.S.
As such, oil producing nations both in the oil-rich Middle East and beyond are struggling with rising budget deficits, debts and dwindling cash reserves, which were largely amassed from oil exports.
According to CNBC, “Fragile Five” oil-producing nations that could be vulnerable includes Algeria, Iraq, Libya, Nigeria and Venezuela.
“The risk of oil coming offline is much more likely to happen in Iraq and Libya is just so worrying as there is an incredible threat from ISIS. Algeria also has many counter-terrorism concerns…as does Nigeria,” she said, adding that Nigeria’s oil could also come offline if militant activity returns to the Niger Delta region and oil infrastructure is attacked.
“All these countries had serious political challenges before the collapse in oil prices and we don’t see a soft landing for any of them,” she warned.