S&P Global Ratings downgraded its sovereign ratings on Kuwait and Oman and revised the outlook on Bahrain to stable from positive following a sharp fall in oil prices amid a price war between major producers Saudi Arabia and Russia.

The rating agency downgraded the long-term foreign-and local-currency credit ratings of Kuwait to AA- from AA and Oman to BB- from BB. It affirmed their short-term ratings at A-1+ and B, respectively.

Significantly lower oil prices in 2020 will have negative economic and fiscal implications for Oman and Kuwait, which rely heavily on hydrocarbon exports. Oman, in particular, could see further funding pressures and borrowing costs on the back of large upcoming debt maturities over the next two years.

Bahrain, whose long- and short-term ratings were affirmed at B+/B, also remains sensitive to energy price shocks despite efforts to increase revenues from other sectors, S&P said. The rating agency expects Brent crude oil to average at $30 per barrel in 2020, implying more elevated current account deficits for Bahrain.

The outlook on Kuwait's ratings is stable, while that on Oman is negative. The stable outlook on Bahrain indicates that the country's neighbors will offer timely support when needed to allow its government to continue implementing measures to reduce its budget deficit.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings.