OPEC Oil Export Revenue Hits A 4-Year Record Low
Low oil prices throughout 2014 put a huge dent in OPEC finances, with petroleum export revenues dipping below $1 trillion for the first time since 2010.
Bloomberg reports that OPEC’s “12 members earned $993.3 billion in 2014, a decrease of 11 percent from a year earlier.” Bloomberg added that OPEC’s “combined current account balance slumped by 35 percent to $273.6 billion as the drop in exports was accompanied by an increase in imports.”
The export data, taken from OPEC’s annual report, illustrates the toll U.S. shale oil production and the oil cartel’s refusal to cut production levels have had on member states. The last time OPEC’s exports dropped below $1 trillion was in 2010 when recession caused oil prices to plunge. In the following years, however, prices rose to eventually hover around $100 per barrel.
The Saudi Arabian strategy of protecting its market share rather than boosting prices is also hitting U.S. and Canadian oil producers, but as the West becomes more efficient at producing oil from shale formations the brunt of low prices will fall onto less efficient producers.
This includes some OPEC member states. Countries like Iran, Libya, Nigeria and Venezuela can’t profitably pump oil out of the ground with prices hovering around $60 per barrel. Instability in the Middle East could also threaten production growth in Iraq and other regions. Russia is also being hurt by low oil prices — combined with sanctions over Ukraine, the Kremlin is losing tens of billions of dollars.
Unfortunately for less efficient producers, oil prices are projected to stay low for the next couple of years. This means even countries like Saudi Arabia will have to dig deeper into their reserves to keep their budget deficit in check.
Bloomberg notes that “OPEC nations agreed on June 5 to keep a production limit of 30 million barrels a day,” but this production limit has been “exceeded every month since June last year.”
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