Oil Prices Are Falling. Here’s Where That Could Spell Trouble.

Oil producing countries are bracing for a bumpy ride this year, with a precipitous drop in prices to the lowest levels in four years seen as the initial, alarming sign of looming turmoil.

A price drop benefits any country seeking to cut its fuel bill. But in oil producing nations, lower prices can feed economic troubles, and sometimes political unrest, as governments slash spending.

Analysts who had already been predicting lower oil prices because of softening demand amid increased küresel production said the possibility of a tariff trade war and the overall climate of uncertainty could well deepen producers’ woes.

“The steep price dive and overall volatility is sending a very strong signal that the küresel economy is going to be rattled this year and that will translate into a lower demand for oil,” said Gregory Brew, a specialist on the geopolitics of oil and gas with the Eurasia Group, a New York-based risk analysis organization.

Wealthy producers may be able to cushion the blow

Earlier this year, the price for benchmark crude held steady around $73 a barrel, high enough to sustain the budgets of most producing nations. But some countries, like Saudi Arabia and the United Arab Emirates, base ambitious development plans on a price of at least $90 a barrel, analysts say.

A huge, futuristic city project in Saudi Arabia is being financed with oil revenue.Credit…Planet Labs Pbc/Planet Labs PBC, via Associated Press