Opec oil revenues to slide 46% to $272B, weakest in 18 years

The pandemic-induced low oil demand, price crash and record production cuts are set to slash the net oil export revenues of Opec members by $272 billion, a 45.7 per cent drop this year compared to 2019.

Combined, all 15 members of the Organization of Petroleum Exporting Countries are estimated to earn about $323 billion in net oil export revenues this year, the lowest level in 18 years, according to the US Energy Information Administration (EIA).

The EIA’s estimate is at par with the forecast by that International Monetary Fund in July that oil exporters in the Middle East and North Africa were set to see their total oil revenues to plunge $270 billion in 2020.

Opec earned an estimated $595 billion in net oil export revenues in 2019, less than half of the estimated record high of $1.2 trillion, which was earned in 2012. The EIA expects a decline in net oil export revenue for Opec in 2020 because of continued voluntary curtailments and low crude oil prices.

“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services,” it said.

In 2019, benchmark Brent averaged $64, down from the annual average price of $71 in 2018. The average price of Brent the EIA expects this year is $41 per barrel, down by more than $20 a barrel compared to last year. Production from Opec is also down due to the cuts.

The EIA expects Opec’s oil output to average 30.7 million bpd in 2020, down by 3.9 million bpd, compared to the average oil production of 34.5 million bpd in 2019.

Opec-Russia dialogue

Meanwhile, an Opec-Russia energy dialogue said a balanced and stable oil market is a prerequisite for post-pandemic recovery, adequate investments and future prosperity for consumers and producers alike.

The meeting was co-chaired by Mohammad Sanusi Barkindo, secretary-general of Opec, and Alexander Novak, minister of energy of the Russian Federation.

The energy dialogue continues to play a key role in reinforcing and enhancing the relationship between the two parties, which was underscored in the discussions at the meeting.

Barkindo said the partnership with the Russian Federation “has evolved into a permanent, transformative force-for-good in the energy market; one that has had a profoundly positive effect on the industry and the global economy”.

Novak noted the high significance that the Russian Federation places on the dialogue with Opec. He also highlighted the secretariat’s fundamental role in the success of the declaration of cooperation.

Both parties emphasised the strategic importance of the relationship between Opec and the Russian Federation.

— issacjohn@khaleejtimes.com