This paper analyzes how oil price shocks affect macroeconomic activity in an oil-exporting small open economy using a DSGE model with production in the tradable and nontradable sectors. I assess the relevance of fiscal policy as a propagation mechanism by analyzing data for Mexico and Norway, two oil-rich countries with different fiscal policy frameworks. I find that fiscal policy is a key transmission channel, as it largely determines the degree of exposure of the domestic economy to oil price shocks. Empirically, the impulse responses of output, the real exchange rate and private consumption to an oil price shock differ greatly between the two countries. Taking the fiscal policy as given by the data, I find that for each country the model can successfully match these impulse responses. Furthermore, the model is unable to explain the responses under counterfactual fiscal frameworks.