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OPEC revenue expected to decline 45% in 2020

OPEC revenue expected to decline 45% in 2020

Tribune News Network
Doha
Net oil export revenue of Organisation of the Petroleum Exporting Countries (OPEC) is expected to drop by more than 45 per cent year-on-year to $323 billion in 2020 due to the economic slowdown induced by the CCOVID-19 pandemic, according to the latest report by the US Energy Information Administration (EIA).
These will be the lowest earnings of OOPEC in the past 18 years.
“This decline is based on [the] forecasts of lower global demand for petroleum products because of the general economic slowdown associated with COVID-19 that has reduced demand for petroleum products and OPEC oil,” EIA said in the report.
In 2019, OPEC’s net oil export revenue decreased by nearly 17 per cent yearly to $595bn. It was less than half the record high of more than $1.2 trillion that OPEC earned in 2012.
“The 2019 revenues fell because of lower crude oil prices and lower production levels, which were the result of an increase in production disruptions and voluntary reductions of oil output among OPEC members,” EIA said.
On a per capita basis, OPEC net oil export earnings are predicted to drop almost 47 percent annually to $638 in 2020. It dropped 19 per cent year-on-year in 2019 to $1,201, down from $1,476 in 2018.
“The decline in expected net oil export revenue in 2020 is driven by continued voluntary curtailments and low crude oil prices,” it added.
Oil prices have surged 10 percent since the beginning of the year, buoyed by Saudi Arabia’s unilateral decision to cut 1 million barrels per day in February and March.
US production was as high as 12 million bpd at the beginning of 2020 and is now close to 11 million bpd. The industry is not expected to recover to historically high output levels anytime soon.
West Texas Intermediate, which tracks US crude grades, will rise to an average $49.70 per barrel in 2021 and increase slightly to $49.81 per barrel in 2022, according to EIA.
“The US crude oil production is expected to fall to 11.1 million bpd this year, before recovering to 11.5 million bpd in 2022.”
“Saudi Arabia’s commitment to deepen cuts is more of a preemptive move”, NBK said in a note. The Kuwaiti bank said the world’s largest oil exporter based its assessment on deteriorating oil demand.
“While oil demand appears to have beaten expectations in December, the current quarter is looking weaker than expected, with many advanced and emerging economies facing a second or even a third round of lockdowns,” NBK said.

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