Who Suffers More from Falling Oil Prices? OPEC Members or United States

The recent slide in global oil prices has once again stirred a debate, who suffers more — the oil-exporting giants of OPEC or the United States, now a major producer itself? The answer, as always, lies in the economics of dependence and the politics of energy.

OPEC countries, particularly in the Gulf, rely overwhelmingly on oil revenues to finance their national budgets, social programs, and development plans. For economies like Saudi Arabia, Kuwait, and Iraq, crude exports still account for more than two-thirds of total income.

When oil prices tumble below US$70 a barrel, their fiscal positions come under pressure. Budget deficits widen, subsidies become unsustainable, and ambitious diversification drives, like Saudi Vision 2030, face funding gaps.

For smaller OPEC producers such as Nigeria or Angola, the pain is even sharper — lower prices mean currency depreciation, inflation, and social unrest.

In contrast, the United States, despite being the world’s largest oil producer, experiences a more nuanced impact. Lower prices hurt shale producers in Texas and North Dakota, where high extraction costs make many wells unprofitable when crude dips below US$60.

Bankruptcies, layoffs, and reduced drilling activity follow swiftly. Yet the broader US economy benefits - cheaper gasoline boosts consumer spending, cuts transport costs, and eases inflationary pressure — all positives for growth and household budgets.

While US oil companies may bleed, the country’s economy as a whole absorbs the shock better than most OPEC states can.

The fiscal and social dependence of OPEC members on oil revenues magnifies their vulnerability. As against this, the United States — with its diversified economy, flexible markets, and domestic consumption — ultimately gains from lower energy costs.

In short, the current oil price decline hurts OPEC far more deeply. For Washington, it is a mixed blessing; for Riyadh and its peers, a financial headache.

Unless OPEC recalibrates its dependence on hydrocarbons, every fall in crude prices will continue to expose the fragility of their oil-driven prosperity.