Strategy Note /
Global

Oil price exposure in emerging markets

  • Oil price is close to a 3-year peak; might looser output be on the way at next OPEC+ ministerial meeting on 4th October?

  • Relief for EM exporters but this may weaken reform impetus; some net importers suffer imported fuel and food inflation

  • EM exporters generally on significant equity valuation premia versus history; Colombia, Oman, Qatar relatively cheaper

Oil price exposure in emerging markets
Hasnain Malik
Hasnain Malik

Strategy & Head of Equity Research

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Tellimer Research
28 September 2021
Published byTellimer Research

The oil price is close to a 3-year peak, raising the question of whether looser output restrictions may be on the way at the next OPEC+ ministerial meeting on 4th October.

Obviously, the oil price rally provides relief for emerging market net exporters, but this may weaken reform impetus (eg in parts of the GCC like Kuwait).

On the other hand, net importers suffer and, for some, imported fuel inflation is compounding imported food inflation (eg Bangladesh, Jordan, Lebanon, Pakistan and Philippines).

EM oil and gas exporter equity markets are already generally at substantial valuation premia versus history. The relatively cheaper exporters are Colombia, Oman and Qatar.

The impact of a 60% higher average oil price in 2021 on EM

Oil & gas export exposure cheaper in Colombia, Oman, Qatar

Related reading

OPEC+ reset, July 2021

International Energy Agency calls time on Oil, May 2021

Oil price rally turns GCC fiscal balances positive for now, reform still a must, March 2021

Saudi's 'Vision 2030' five years in, April 2021

Commodity food prices accelerating again, September 2021