The collapse in oil and natural gas prices is creating an uneasy situation for producing nations that rely on that revenue to function, a U.S. State Department official said Tuesday at a conference in Houston.

“How long can we go in an environment of $45 to $50 oil at 60 percent reduced revenues before that starts causing significant political instability?” said Amos Hochstein, special envoy and coordinator for international energy affairs for the State Department, told an audience gathered for a conference in downtown Houston. “I worry about that quite a bit.”

Without naming specific countries, Hochstein said there are several producing nations, especially those that pump 3 million barrels or less per day, that are struggling with the sharp reduction in revenue from oil and gas sales that fuels their budgets. Compounding the problem, some oil companies who operate in those territories have said they plan to curtail spending and new investments there until oil prices recover, Hochstein said at the Global Energy Summit hosted by law firm DLA Piper.

That’s creating problems for some allies of the United States, including Iraq, which has been financially pinched by the oil slump at a time when it’s scrambling to fend off attacks from a group of extremist militants calling themselves the Islamic State, Hochstein said.

Some countries have already started to respond to the crisis by slashing subsidies to save money, he said. The oil-rich United Arab Emirates deregulated fuel prices in August, pushing pump prices higher for motorists and sowing speculation that other Middle Eastern producers may follow suit.

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