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22 June 2024

Arab oil revenues exceed $450bn in 2007





Arab states are projected to net their highest oil export earnings of more than $450 billion (Dh1,653bn) in current prices last year but their real income could be $100bn lower in 1995 real dollar prices, according to regional estimates.


In 1970 dollar prices, the revenues could be as low as third their nominal income, taking into account inflation, the declining US dollar and other factors.


The six GCC states and their fellow members in the 22-nation Arab League pumped about 23 million bpd of oil and condensates last year and output is expected to have remained unchanged in 2007.


It was their highest oil and condensate production levels since they began pumping crude more than half a century ago and oil prices were expected to match that surge by soaring to a record $70 in current prices last year.


“Arab states earned a record $339.1bn from oil exports in 2006 and the earnings were expected to peak at over $450bn last year,” said a source at the Kuwait-based Organisation of Arab Petroleum Exporting Countries (Oapec).


“That is in current prices but in fixed 1995 prices, the earnings could be below $350bn this year. It is still a record level since 1995 but if you consider the real value in 1970 price, then the income this year could be below a third of what the Arab countries earned during the oil boom of 1980s.”


Oil prices soared to their highest average of $61 a barrel in 2006 because of geopolitical tensions, speculation, narrowing spare capacity and surging demand, mainly in China, India and other key consumers.


According to the Organisation of Petroleum Exporting Countries (Opec), the average price of its basket of crudes is projected to soar to a new record of around $68 a barrel this year as demand remained strong. The price could stay as high as $60-70 in 2008, according to Opec.


But real prices were much lower if inflation and the falling dollar value were calculated. In 1995 constant dollar, crude prices averaged $57 this year and nearly $50 in 2006. They were estimated at $43.1 and $31.3 in constant prices in 2005 against a nominal price of around $50.6 and $36 respectively.


Oapec has not yet released oil income figures for 2007 but sources said the UAE and its partners in the GCC are forecast to earn over two-thirds of the total income given their high production of around 15.5 million bpd.