Five Charts revealing the Losers of Lower Oil Prices

Update Jan 7 2015. The price of a barrel of crude oil fell below $48 yesterday. This means the oil price has collapsed 57% since the peak in June of this year. And while there are many, many winners of lower oil prices around the globe, here are some of the biggest losers.

First up are energy companies worldwide. During the 50%+ collapse of crude oil since June 20th energy companies have lost roughly 25% of their value. To put this graph (and those that follow) into perspective, since June 20th the MSCI World Index is now down 5%. So, compared to the MSCI World Index the decline in energy stocks amounts to 20%(!)

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Next, are US shale companies, especially those with a junk status. The spread on US High Yield shale companies has widened massively from 300 basis points to over 1000 basis points again. Hence, the poor performance of high yield energy bonds. Since the peak in oil prices in June, these bonds have declined by  than 17% in value.

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More losers of lower oil prices are found in countries where oil dominates export numbers and trade balances. These countries are mostly concentrated in the Middle East and Africa. The chart below shows the stock market performance of three countries in these regions, Dubai, Nigeria and Saudi Arabia. Losses vary from 17% to almost 24%, again a sharp underperformance compared to the 5% negative return on the MSCI World Index.

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Russia deserves its own chart as the impact of lower oil prices is exaggerated by other factors like the political difficulties with Ukraine and the sanctions that followed as a result of that. The ruble is down 45% since June and the returns on equities and bonds, adjusted for this massive depreciation of the Russian currency, look pretty miserable as well. Given the awkward position Russia finds itself in currently, I think it’s fair to say that this country is probably the biggest loser of lower oil prices.

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Finally, clean tech and renewable energy companies have been hit too. Although clean and renewable energy is definitely the way to go in the long run, lower oil prices in the short-term offer energy consumers a cheaper, albeit it more polluting, alternative. Hence, clean and renewable energy stocks have come down as well (although the first recovered somewhat in recent days), with losses up to 20%.

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If you think there are ‘losers’ missing from this blog, please let me know (Twitter @jsblokland)

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