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EIA projects OPEC revenues will be up 55 percent in second half of 1999; Saudi Arabia top earner in group Full year expected to be up 23.8 percent from 1999, still less than one-fourth of peak 1980 revenues Petroleum News Alaska Staff
A report released by the U.S. Energy Information Administration in August forecast that OPEC oil export revenues for 1999 will be $123.6 billion, 23.8 percent higher than in 1998, which saw the lowest inflation-adjusted oil export revenues since 1972.
Despite this increase, EIA said, OPEC oil revenues in 1999 are still expected to be less than one-fourth of inflation-adjusted revenues in the peak revenue year of 1980.
With the rapid increase in oil prices beginning in March 1999, OPEC revenues for the second half of 1999 are expected to be up sharply (55 percent) from the second half of 1998, and also up sharply — 42 percent — from the first half of 1999. For the first half of 1999, OPEC revenues were down slightly — around 4 percent — from the same period in 1998.
Increased OPEC oil export revenues in the second half of 1999 could result in a dramatic improvement in OPEC finances and economic situations in general as the year progresses. Despite a projection of 29 percent higher oil prices in 1999 compared to 1998, OPEC oil export revenues are expected to be only 24 percent higher for 1999 as a whole due to an overall decrease in net oil exports of around 4 percent.
Challenges may recede Low OPEC oil revenues during 1998 and early 1999 posed difficult social/economic/political challenges and tradeoffs for many OPEC countries, which now may begin to recede due to rising oil prices and revenues since March of this year.
Saudi Arabia maintains the highest share of OPEC oil export revenues (at around 28 percent of the OPEC total). Other top OPEC oil exporters include Iran, Venezuela, Iraq, and Nigeria.
Iraq is expected to earn around $11.4 billion in 1999, which means it will surpass its current United Nations oil export ceiling (under the “food-for-oil” program) of $10.5 billion ($5.26 billion every 180 days). During the second half of 1999, Iraq is expected to earn $7.1 billion in oil export revenues, compared to $4.4. billion in the first half of the year.
As of mid-August, 1999, it is unclear what the U.N. Security Council’s response would be if Iraq exceeded its revenue ceiling in the current phase.
In addition to the OPEC countries, low oil export revenues during 1998 and early 1999 seriously affected non-OPEC countries, such as Russia and Mexico, as well. Russia’s current economic difficulties are in part due to a sharp decline during 1998 and early 1999 in the country’s oil and gas export revenues. Increased oil revenues during the rest of 1999, on the other hand, could help Russia’s economy.
According to EIA’s Monthly Energy Review, the price collapse of late 1997 and 1998 cut U.S. oil imports by more than $20 billion. In 1998, the United States imported 10.7 million barrels a day of oil at a cost of $50.3 billion. In 1997, in contrast, the United States imported less oil (10.2 million barrels per day) at a higher cost ($71.2 billion).
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