But ING economists say that the news is not so good for some oil producing nations.
Half of government receipts
In the February 2015 economic update video for eZonomics, head of macroeconomics Maarten Leen explains that it is not uncommon in some oil producing countries for oil revenues to make up 50% or more of total government receipts.
“In some cases it even amounts to 80% or higher,” says Leen. “As a result, most oil exporters need oil prices considerably above the current level in order to balance the government budget.”
Leen says strong economic performance in other sectors and having a financial buffer can improve resilience against oil price shocks for oil producing nations. A shortage of financial reserves can see governments cut spending or sharply hike taxes.
“According to these metrics the economies of Iran and Venezuela seem most vulnerable if the current oil price persists,” says Leen.
Winners and losers
When prices move, there are likely to be winners and losers. And Leen suggests that even more resilient oil producing economies will be feeling some pain from recent shifts. “Almost all oil producing countries will need to adjust to the new realities in the global oil market.”