Petrodollars Leave World Markets for First Tme in 18 Years

Energy-exporting countries are set to pull their "petrodollars" out of world markets this year for the first time in almost two decades, according to a study by BNP Paribas.

Driven by this year's drop in oil prices, the shift is likely to cause global market liquidity to fall, the study showed.

Brent crude futures have fallen 23 percent this year, with 2014 promising to be only the second year since 2002 that crude prices will end the year lower than they began it.

This decline follows years of windfalls for oil exporters such as Russia, Angola, Saudi Arabia and Nigeria. Much of that money found its way into financial markets, helping to boost asset prices and keep the cost of borrowing down, through so-called petrodollar recycling.

This year, however, the oil producers will effectively import capital amounting to $7.6 billion. By comparison, they exported $60 billion in 2013 and $248 billion in 2012, according to the following graphic based on BNP Paribas calculations:

Petrodollar recycling peaked at $511 billion in 2006, BNP said.

"At its peak, about $500 billion a year was being recycled back into financial markets. This will be the first year in a long time that energy exporters will be sucking capital out," said David Spegel, global head of emerging market sovereign and corporate Research at BNP.

In other words, oil exporters are now pulling liquidity out of financial markets rather than putting money in. That could result in higher borrowing costs for governments, companies, and ultimately, consumers as money becomes scarcer.

Spegel acknowledged that the net withdrawal was small. But he added: "What is interesting is they are draining rather than providing capital that is moving global liquidity. If oil prices fall further in coming years, energy producers will need more capital even if just to repay bonds."

The reversal is largely down to Russia and the rest of the ex-Soviet Union, which BNP estimates have withdrawn $57 billion from world markets.

Russian companies have been shut out of global markets since Western countries imposed sanctions because of the conflict in Ukraine. Those companies are increasingly forced to rely on their own cash reserves or central bank funding to meet external debt repayments.

(By Chris Vellacott, Reporting by Chris Vellacott; Editing by Larry King)