DOHA: OPEC nations’ revenue from petroleum exports plunged below US$1 trillion last year for the first time since 2010, highlighting how plummeting crude prices have hurt nations reliant on oil sales to fund their economies.
The group’s 12 members earned US$993.3 billion last year, a decrease of 11 percent from a year earlier, according to OPEC’s annual report published on Tuesday.
Their combined current account balance slumped by 35 percent to US$273.6 billion as the drop in exports was accompanied by an increase in imports.
The revenue drop shows the strain on the group’s members as they increase pumping at a time of oversupply, following a Saudi Arabia-led strategy of defending market share instead of prices.
OPEC nations on June 5 agreed to keep a production limit of 30 million barrels per day, a level they have exceeded every month since June last year, according to data compiled by Bloomberg.
“Given the weakness in the first half of the year, another sub-US$1 trillion revenue year remains on the table,” Hamza Khan, an Amsterdam-based senior commodity strategist at ING Bank NV, said by e-mail yesterday.
The impact on the government finances of some OPEC members could be mitigated by increased production and foreign direct investment, he said.
Brent for August settlement gained 1.2 percent to US$64.43 per barrel at 9:48am yesterday on the London-based ICE Futures Europe exchange. The benchmark crude has rebounded 43 percent since reaching a six-year low of US$45.19 in January.
West Texas Intermediate for July delivery rose US$0.31 to US$60.28 per barrel in electronic trading on the New York Mercantile Exchange at 9:11am London time yesterday. Prices have increased 13 percent this year.
If OPEC keeps pumping at current rates through the third quarter, production will have exceeded demand for the longest period in at least three decades, International Energy Agency data showed.
Almost all the group’s members are failing to earn enough from current oil prices to balance their budgets, according to data compiled by Bloomberg.
“OPEC members may have been blindsided by lower revenues last year, but they appear to be mitigating risks moving forward,” Khan said.
Venezuela, which had been one of the most vocal OPEC members in calling for production cuts to support oil prices, has changed its stance.
Venezuelan Minister of Oil and Minerals Asdrubal Chavez on Tuesday said the oil market would stabilize by the end of this year, calling the June 5 meeting “very successful.”
Venezuelan President Nicolas Maduro last month announced plans for joint investments with Russia of more than US$14 billion in domestic oil projects.
