Major oil exporters from the emerging market universe such as Russia, Venezuela, Colombia, Ecuador and Nigeria will win from Opec's decision to cut its output, but some producers may be losers as countries like Mexico may have as much to fear from high prices as gain.

Opec yesterday agreed to cut daily oil production by 1.5 million barrels per day to 25.2 million. The prospect of cuts has caused a rebound in prices for the benchmark Brent crude blend, pushing it to $25 a barrel, some $2-$5 more than many emerging market analysts had been forecasting for the first quarter of 2001.

The rise is obviously bad news for major importers such as Brazil, South Korea, Thailand and Ukraine, but for emerging markets such as Mexico, which are highly dependent on growth in the stuttering U.S., rising oil prices are a double-edged sword.

"The impact on Mexico is hard to discern, as though higher prices help the fiscal balance, they hurt the U.S. and therefore Mexico by direct association," WestLB emerging market strategist Sara Zervos said in a note to investors yesterday. "Thus, investors are feeling a little concerned over Mexican assets at the moment."

The latest figures show that Mexico exported 1.697 million barrels per day in November. Mexican debt has lagged the emerging debt universe this year, with the Mexican portion of the industry benchmark JP Morgan Emerging Markets Bond Index down 0.06 percent this year, compared with an almost two percent gain on the EMBI Global index.

Two other producers, Venezuela and Nigeria will win on the fiscal front, in the form of higher government revenues and stronger balance of payments, but could be losers as the impetus to reform dies.

In Venezuela, where oil accounts for 80 per cent of hard currency earnings, the oil economy grew 3.4 per cent in 2000 due to a price boom which saw Brent hit a $35 high in October. The balance of payments surplus in 2000 was six times higher at $6.1 billion. "It means they do not have any fiscal problems but it does not help them in the longer term with reforms," said Jerome Booth, head of research at Ashmore Investment Management.

Russia, though, has managed an effective economic reform programme through 2000 and looks certain to continue in 2001, using oil as a cushion to buy time to restructure. "In Russia there is an internal will to reform, whether it continues depends on the battle in President (Vladimir) Putin's head," said Richard Segal, head of sovereign research at consultancy Emerging Market Economics.

High oil prices in 2000 were a major contributory factor in interest rate hikes in the emerging economies of central and eastern Europe, even though many countries do not have big oil import bills. South Africa and Poland are respectively the fifth and seventh largest coal producers and therefore not as dependent on oil imports as countries such as Brazil or South Korea.

A rise in inflation means that central banks are forced to adopt tighter monetary policy and degrades growth prospects, thus putting pressure on budgets in the medium term. Ashmore's Booth said that among large importers such as South Korea and Brazil, high oil prices were not a disaster. "In the case of Korea, it is no bad thing to have an external impetus to reform, while in Brazil they managed to bring inflation in at the bottom end of their range, despite rising oil prices," he said.

Brazil's IPCA inflation index came in at 5.97 per cent, below a target of six per cent in 2000. Rising gasoline prices contributed 1.1 percentage points of the inflation. Looking forward, Ashmore's Booth said that oil would not derail the improving credit story of emerging markets. "It is important there is greater stability in oil prices and the risk of major peaks has diminished now that winter is getting out of the way," he said.