Arab oil income dips 46% in 2009

A sharp decline in oil prices and production because of the global financial distress depressed the combined Arab oil export earnings by nearly 46 per cent in 2009 but the income remains far higher than in early 2000s.

Official figures showed the earnings of the Arab oil producers stood at around $378 billion last year compared with a record high of about $690 billion in 2008.

“The decline was due to a sharp fall in oil prices after the 2008 global crisis and lower output by most Arab producers,” the 10-nation OAPEC said.

Oil prices climbed to an all time high average of around $95 in 2008 although they plunged by nearly $100 in the fourth quarter because of the crisis.

Prices averaged as low as $35 in the first quarter of 2009, prompting the 12-nation Organization of Petroleum Exporting Countries (OPEC) to agree on cutting supplies by a total 4.2 million barrels per day.

Although the cartel’s compliance with the agreed cuts has not been complete, crude prices have sharply rebounded over the past months, buoyed by lower supply and a gradual recovery in the global economy.

Despite their steep decline last year, the Arab oil export earnings remain much higher than their level in the early years of the latest oil boom.

OAPEC put the income at around $188 billion in 2000, when oil prices averaged about $27.6. The income dipped to nearly $141 billion in 2002 due to lower prices before rebounding to $224 billion in 2004. Revenues sharply grew to nearly $410 billion in 2006 after oil prices shot up to an average $61.

Analysts expect the income to rebound in 2010 because of higher oil prices, which are projected to average above $70 compared with $62 in 2009.

Figures by the US Energy Information Administration (EIA) seven Arab oil producers inside OPEC earned close to the total Arab income through 2009 in the first nine months of this year, estimating the earnings at $370 billion. More than half the January-September income was earned by Saudi Arabia and the UAE, with their income standing at $146 billion and $49 billion respectively.

OPAEC’s figures showed the total Arab oil production reached one of its lowest levels in many years in 2009, when it stood at around 21.5 million bpd.

“After gradually rising in previous years, oil production by the Arab countries declined to its 2000 level….it accounted for around 30.6 per cent of the total global crude supplies last year,” OAPEC said.

In a previous study, OAPEC said its members earned a total $3.1 trillion during 1997-2009 from a production of around 71.5 billion barrels. More than a fifth of the total earnings were achieved in 2008.

The report showed OAPEC’s collective income grew by nearly 17 per cent annually during that period, with the highest growth achieved by Iraq following a surge in its output after the end of the war.

From around 1.38 million barrels per day in 1997, Iraq’s oil production soared to nearly 2.27 million bpd in 2008 and remained almost unchanged in 2009.

Qatar recorded the second highest income growth of 17.5 per cent as its crude output jumped from about 406,000 bpd to 854,000 bpd during the same period.

Libya’s earnings swelled by 17.4 per cent as its oil supplies surged from around 1.39 million bpd in 1997 to 1.74 million bpd in 2008.

Growth was put at 16.8 per cent in Saudi Arabia, 16.4 per cent in Kuwait, 16.3 per cent in the UAE, 15.6 per cent in Bahrain, 14.4 per cent in Algeria, 13.4 per cent in Syria and around 4.5 per cent in Egypt.

According to OAPEC, the weak dollar and high inflation rates depressed the combined Arab oil export earnings by around $118 billion in 2008 despite the surge in crude prices to a record high level.

It showed real revenues, calculated in 1995 dollar rate, stood at only around $499.1 billion, nearly 20 per cent below the nominal income.

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