Most of the nation states outside of the Middle East, and many of those within it, desperately need the revenue flows to balance Public Sector books.

In the recent past, action from local administrators in countries like Venezuela and Russia has meant that there is almost no outside financial help to be had when times get tough.

If dealers drive oil even lower, and it remains there, then the consequences could be quite severe.

Economists make much of the fact that the emerging markets will take up any slack in western demand. However with fuel efficiencies getting ever greater the increased demand from economic growth must be considerable just to keep up with reducing requirements.

It looks to many investors that the price will continue to go down. If so, those to decrease further will be the ones profiting from the fall.

Of course, if there is a concerted effort to decrease supply then the risk of a price bounce or permanent return to higher levels could catch out the speculators.

OPEC recently inspired such a rally when it announced a production cut. However that rally was both muted and short lived.

Whilst many fear the cartel and its potential power, the world has seen past evidence of poor attempts by OPEC to rein in production. According to it looks like the traders see no reason to expect that this time will be any different. If the price remains at the current levels for some time the temptation to ?pump just a little more? will become extreme as State coffers begin to dwindle.

Crude Oil is now around the $50 mark but there does appear to be some support at just below this price. Especially if the OPEC partners can actually implement the output cuts rather than just agree to them.

Easier said than done. And the failure of any such implementation is what many of the speculators are really betting on.

Countries such as Venezuela and Russia are massively exposed to a falling oil price. Their economies are geared to the higher revenue flows. Sustained periods below $60 might make for political upheaval with extreme shifts to the left or right possible.

Personally, I have to say that on current output levels, $60-$80 would appear to be the stable level. However that is vulnerable to wild swings as momentum and fear drives prices to extremes.

Mexico recently announced that they had hedged $1.5bn worth of oil at $75-$100 per barrel to protect themselves from falls. Whether other countries have hedged to similar levels remains to be seen.

Other nations have built spending plans on the price of oil staying above $80. Going forward, one expects plenty of posturing and talk of restricting supply to force up the price.

Unfortunately for the Oil producing nations none of them really trust each other when it comes to production levels.

The talk of consensus will always go hand-in-hand with the suspicion that one or more of them is exporting out the ?back door? ie gaining the higher prices without suffering the lower output income.

Time for a short term bet on the prices to fall further?

Spread bets carry a high level of risk to your money and may not suit all forms of investor. You can lose more than your initial investment so make sure you only speculate with capital that you can afford to lose. Likewise make sure you understand the risks involved and seek independent financial advice where necessary.