Oil and Gas

Oil prices pose biggest political risk: Aon

Oil boosts political risks worldwide
Oil boosts political risks worldwide

Low oil prices will compound political risks across emerging markets this year, according to a new report released Wednesday.

Aon's Political Risk Map for 2015 warns that countries including Russia, Iraq, Venezuela and Libya will face further political pressure in the months ahead.

"The fall in oil prices are having quite a dramatic impact on a lot of oil producing countries which don't have the strength of foreign reserves," Karl Hennessy, CEO, Aon Global Broking told CNBC via telephone ahead of the report's release.

"As they start to lose revenue, this puts pressure on countries and raises the potential for instability."

The annual study grades 163 countries for political risk based on factors like the probability of political interference, banking sector vulnerability, sovereign non-payment and quality of regulation.

Ukraine continues to rank amongst the world's riskiest states. Despite hopes for a successful ceasefire as a result of the Minsk 2 agreements, Aon's report warns a resolution over the disputed region of eastern Ukraine is unlikely in 2015.

It follows similar rankings, including Verisk Maplecroft's Political Risk Dynamics Index, which categorized the country as "high risk" for investors.

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"Russia is clearly suffering," Hennessy said. "[And] that overflows not just into Ukraine - which is suffering as well under significant pressure including from a sovereign debt perspective - but is going to spill out into other trade partners including Belarus and Kazakhstan," he added.

Conflicts with non-state fighters like ISIS and Boko Haram also pose significant risks for countries with poor border control across Africa and the Middle East, making the "specter of political violence inevitable," Hennessy said.

This year, the report increased threat levels for 12 countries including Libya, Oman Pakistan and Haiti.

Meanwhile, Latin America and the Caribbean propelled upgrades for a majority of the countries upgraded this year thanks to improved business environments and better relations with the US.