Fall in crude prices to cut Opec's income 50 per cent

A sharp fall in oil prices coupled with lower output will depress Opec's income by more than 50 per cent in 2009 but the revenues are projected to rebound sharply in 2010, according to official US figures.

As they pump around half Opec's production, the GCC members of the 12-nation Cartel could earn as low as $190 billion (Dh697bn) this year, far below their record nominal income of nearly $500bn in 2008.

The figures by the Energy Information Administration (EIA) of the US Department of Energy showed Opec's total crude export revenues hit an all time high of $972bn, nearly $300bn above its 2007 earnings.

The income is expected to crash to only $387bn this year as crude prices are projected to average half their 2008 level and Opec is expected to sharply trim crude supplies in line with a total pledged cut of 4.2m bpd.

EIA gave no breakdown but according to analysts, the combined income of the four GCC Opec members — the UAE, Saudi Arabia, Kuwait and Qatar — could plunge to nearly $190 billion in that scenario. The level is way below the record earnings of around $496bn achieved in 2008, according to EIA.

The four Gulf states, which control around 45 per cent of the world's extractable oil deposits, are expected to account for the bulk of the Opec supply cuts as they produce nearly half the Cartel's total output.

At around $190bn, the income would be one of its lowest levels in eight years but far above their 1998 income of only around $60bn.

EIA gave no output and price estimates but said the Cartel's crude export earnings would rebound by around 36 per cent to nearly $526bn in 2010.

Experts said such forecasts showed EIA is projecting a recovery in oil prices and higher output in 2010 apparently due to an expected gradual recovery in the global economy and consequently growth in oil demand. In another report released last week, EIA estimated the UAE's income in 2008 at around $89 billion, nearly 41 per cent above its earnings of $69bn in 2007.

 

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