AKIPRESS.COM - Standard & Poor’s Ratings Services on Monday cut its credit ratings on Kazakhstan, Bahrain, Oman and Venezuela, citing the impact of plunging oil prices on the oil producing nations.

Meanwhile, the rating firm issued negative outlooks for Bahrain, Kazakhstan, Oman, Saudi Arabia, and Venezuela, indicating possible downgrades. It affirmed its ratings on Qatar, Abu Dhabi, Malaysia and Cameroon.

The rating changes follow a sharp fall in oil prices in recent months.

S&P now assumes an average Brent oil price of $55 a barrel this year and $70 a barrel over the next three years, compared with its December projection of $80 a barrel in 2015 and around $85 a barrel through 2018.

The downgrades leave Bahrain and Kazakhstan’s ratings one and two notches, respectively, above junk status, and Venezuela eight notches into junk. Oman stands at A-minus, and Saudi Arabia at double-A-minus.

S&P, however, affirmed Abu Dhabi and Quatar’s double-A ratings, two notches below the coveted triple-A rating, saying the emirates stronger fiscal positions will be able to buffer the impact of lower oil prices.

It also affirmed its A- rating on Malaysia and its B rating on Cameroon.

S&P noted Bahrain derived about 65% of its fiscal revenue last year from crude oil receipts, which are part of the 84% of total revenue it derives from the oil and gas industry.

Wages and salaries account for 42% of total government spending, with subsidies representing another 30%.

“These increasingly burdensome social expenditures underpin Bahrain’s pronounced vulnerability to oil prices,” the rating firm said in a statement, noting the government’s debt burden has doubled since 2009, to 43% of gross domestic product at the end of 2014.

The oil sector, meanwhile, accounts for an estimated 20% to 30% of Kazakhstan’s GDP, more than 50% of revenue, and 60% of exports, S&P said.

The government’s plan to stimulate the economy with billions of dollars, the rating firm said, won't be enough to offset weak consumer demand this year, hurt by falling consumer confidence and external factors such as the recession in Russia.

The rating firm said it expects Kazakhstan’s oil production to decrease slightly, with output falling in 2015 to 80.5 million tons, from 81.8 million tons, and expects Kazakhstan to post a current-account deficit of more than 4% of GDP in 2014.

In Venezuela’s case, the rating firm said the government had failed to take action in time and now—buffeted by a recession, high inflation and growing shortages in consumer goods—has little room to make the changes necessary “to avoid a default of its commercial debt.”

S&P said it expects the South American country’s GDP to contract by as much as 7% in 2015, with another decline expected the following year. Inflation, S&P said, could reach 100% or more by year’s end, mainly due to growing shortages of basic products.