Opec income dips by $420bn in eight months

A sharp decline in crude prices allied with massive output cuts to slash Opec's oil export earnings by nearly $420 billion (Dh1.54 trillion) in the first eight months of 2009 over the same period of 2008, official US data showed yesterday.

The combined income of the 12-nation Organisation of Petroleum Exporting Countries plunged to about $340bn in the first eight months of this year from nearly $760bn in the same period last year.

The figures by the Energy Information Administration of the US Department of Energy showed the group's total income for 2009 would dip to nearly $555bn from a record $971bn in current prices last year.

But the report projected the revenues to rebound to nearly $667bn in 2010 apparently because of higher prices and a recovery in global demand.

Oil prices averaged about $55 a barrel in the first eight months of 2009, far below the price of more than $110 in the same period last year.

Opec has also decided to slash its crude supplies by 4.2 million barrels per day to support prices. Nearly half of the reductions have been undertaken by the UAE, Saudi Arabia, Kuwait and Iran given their large output, which accounts for nearly two thirds of the group's total production.

The EIA figures showed the UAE earned nearly $31bn in the first eight months of 2009, below half its income of about $70bn in the same period of 2008.

Saudi Arabia, the world's oil superpower, netted nearly $92bn while income stood at $29bn in Kuwait and $14bn in Qatar.

Outside the GCC, Iran emerged as the second largest earner in Opec, netting nearly $32bn in the first eight months.

The revenues of conflict-battered Iraq, which has been outside Opec's quota system for many years, stood at about $23bn while they stood at $21bn in Libya, $25bn each in Algeria and Angola, $26bn in Nigeria, $19bn in Venezuela and $4bn in Ecuador, according to EIA.

The surge in crude prices to a record average of $95 in 2008 combined with rising production boosted Opec's income to its highest ever level of $971bn in current prices and allowed most members to record massive fiscal surpluses.

Prices rapidly plunged in the fourth quarter of 2008 under the pressure of faltering demand because of the global financial turbulence.

Keep up with the latest business news from the region with the daily Emirates Business 24|7 newsletter. To subscribe to the newsletter, please click here.

Follow Emirates 24|7 on Google News.