OPEC members’ earnings to drop by $121 billion over sliding oil prices

The U.S Energy Information Administration (EIA) has estimated that members of the Organization of the Petroleum Exporting Countries (OPEC), excluding Iran, will earn about $700 billion in revenue from net oil exports in 2014.

Iran is excluded because current sanctions make it difficult to estimate revenues.

This represents a $121 billion or 14 per cent decrease from 2013 earnings and the lowest earnings for the group since 2010.

Specifically, Nigeria, which earned $84 billion last year, is estimated to realise $72.24 billion this year.

The cartel’s net oil export revenue, excluding Iran in 2013 was $821 billion.

Nigeria realized $84 billion from crude oil export in 2013, Iraq, $86 billion; Kuwait, $92 billion, Saudi Arabia, $274 billion; Venezuela, $62 billion and others.

EIA said in a statement on Monday, that OPEC earnings declined in 2014 largely due to decreases in the amount of OPEC oil exports and lower oil prices, with the 2014 average for Brent crude oil projected to be eight per cent below the average 2013 price.

It added that for similar reasons, revenues for OPEC (excluding Iran) in 2015 are expected to fall further decline to $446 billion, representing about 46 per cent below the 2013 level.

Brent crude oil is projected to average $68 per barrel in 2015, down from $100 per barrel in 2014 and $109 per barrel in 2013.

It stated: “Iran is excluded in this calculation because current sanctions make it difficult to estimate their crude oil export revenues. Iran may be taking discounts on the crude oil it exports and may not be receiving all the revenue from those sales because of restrictions on accessing international payment systems.

“Prolonged periods of lower oil prices have the largest effect on OPEC countries that are more sensitive to losses in revenue, most notably Venezuela, Iraq, and Ecuador. Governments in these countries were already running fiscal deficits in 2013, and their sovereign wealth funds are smaller compared to other OPEC members. This implies that these countries may not be able to fill budget gaps for as long as other OPEC members.

“Further revisions to future budget plans may be required in many OPEC member countries, particularly the countries cited above, because of lower oil prices and large uncertainty over future global economic growth and crude oil production levels. Geopolitical risk may also be elevated because of lower government spending.

EIA estimates that global consumption grew by 1.3 million bbl/d in 2013, averaging 90.5 million bbl/d for the year.

It expects global consumption to grow by 1.0 million bbl/d in 2014 and 0.9 million bbl/d in 2015. Projected global oil-consumption-weighted real gross domestic product (GDP), which increased by an estimated 2.7 per cent in 2013, is projected to grow by 2.7 per cent and 2.9 per cent in 2014 and 2015, respectively.

Compared with last month’s forecast, global consumption was revised downward by 0.2 million bbl/d in 2015, based on a 0.3 per cent reduction to forecast global oil-consumption-weighted real GDP growth. In the short term, the income elasticity of global demand is greater than the price elasticity of global demand. Thus, the negative impact of lower forecast economic growth on demand outweighs the positive impact of lower oil prices.

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