It's not only energy stocks that're taking a big hit from the oil price slump.
In fact, any company that's exposed to the Middle East is likely to face an earnings headwind as Saudi Arabia moves to cut spending to narrow its budget deficit.
The situation is growing increasingly desperate for the oil exporting kingdom as the crude price halved over the past year and commodity analysts warn of lower for longer oil prices due to slowing demand and a supply glut.
The country's deficit is expected to blow out to 400 billion riyals ($148.4 billion), if forecasts by the International Monetary Fund (IMF) are to be believed, as Bloomberg reports that Saudi Arabia is considering cutting spending on infrastructure projects, including the Riyadh Metro.
Saudi Arabia won't be the only one slashing spending on infrastructure given that regional economies are also heavily reliant on oil exports to fill government coffers.
Engineering contractor Worleyparsons Limited (ASX: WOR) is probably the most affected by this development and it goes a long way to explaining the stock's 4.9% crash this morning to a decade low of $6.18.
Not only are most of Worleyparsons' clients from the oil & gas sector, but Worleyparsons is part of the consortium that's building the Riyadh Metro.
While the stock may have shed over 60% of its value over the past 12-months, I see further downside risk as energy companies are likely to cut capital expenditure further over the coming year.
Construction giant Cimic Group Ltd (ASX: CIM) is another that will be in the firing line from any further spending cuts in the region through its Habtoor Leighton Group joint venture.
Cimic holds a 45% stake in the JV, which describes itself as one of the leading multi-disciplined contractors in the Middle East and North Africa.
The silver-lining is that Habtoor Leighton Group contributed a relatively modest 6.4% to group revenue of $8.6 billion that was recorded in the six-months to end June 2015.
Shares in Cimic fell 2.1% to $23.09 in late morning trade.
Another ASX stock that is exposed to the Middle East is marine engineering firm MMA Offshore Ltd (ASX: MRM) – not that investors seem concerned at the moment with the stock inching up half a cent, or 1%, to 53 cents.
While the Middle East is one of the key markets that MMA Offshore operates in, it's hard to quantify its exact exposure from its accounts.
The company generated 80% of group revenue from Australia and lumps sales from the rest of the world together.
But given the stock has shed three-quarters of its value over the past year, the bad news is probably in the price already.
