The Energy Information Administration (EIA) estimates that OPEC revenues from net oil exports will fall substantially from 2013 levels. The EIA estimates that OPEC, excluding Iran, will earn about $700 billion in revenue from exports in 2014.The forecast is a 14% decrease from 2013 earnings when the cartel earned approximately $821 billion, and the lowest earnings for the group since 2010, according to the EIA’s Short-Term Energy Outlook.
OPEC earnings declined in 2014 largely for two reasons, says the agency: decreases in the amount of OPEC oil exports and lower oil prices. In 2014, the average price for Brent crude is projected to be 8% below the average 2013 price.
The Agency expects that revenues for OPEC in 2015 will be even lower for similar reasons. OPEC is projected to earn approximately $446 billion next year, a 46% decline from 2013. Brent crude is projected to average $68/bbl in 2015, down from $108.56/bbl in 2013.
Prolonged periods of lower oil prices have the largest effect on OPEC countries that are more sensitive to losses in revenue, most notably Venezuela, Iraq and Ecuador. Governments in these countries were already running fiscal deficits in 2013, and are already beginning to see increased civil unrest.
Iran was excluded in the EIA’s calculations because current sanctions make it difficult to accurately estimate the country’s revenue from crude oil export. The EIA suspects Iran may be accepting discounts on crude exports and not be receiving all the revenue from those sales because of restrictions on accessing international payment systems.
Oil prices have plummeted in the last six months as an oil glut and sluggish demand led to dropping commodity prices for oil. At the time of this article’s writing, WTI was trading at $57.61, 46% lower than the June 2014 price of $105.79, and Brent was trading at $62.02, down 45% from its June 2014 price of $111.80.
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