The latest report released by the U.S. Energy Information Administration stated that in 2019, OPEC’s oil revenue was US$595 billion. In 2020, this revenue may fall to an 18-year low, to $323 billion.
Saudi Arabia accounted for the largest share of OPEC’s total oil revenue in 2020, and it is not unexpected to become OPEC’s largest exporter. In 2019, Saudi Arabia’s oil revenue totaled US$202 billion, accounting for more than one-third of total revenue. However, like other OPEC exporting countries, Saudi Arabia has also been severely impacted by the epidemic.
EIA and numerous forecasters warn that oil The decline in income will have a severe impact on OPEC economies.
The intelligence agency said: “Reduced oil revenues will have an adverse impact on the budgets of member states, which rely heavily on oil sales to import goods and fund social programs. and support public services.”
However, OPEC is optimistic about its near-term prospects. Despite the huge deficit and a surge in loans to support the budget, OPEC estimates that oil demand will gradually recover this year.
OPEC predicted in its latest “Monthly Oil Market Report” that oil demand will increase by 5.9 million barrels per day this year, reaching 25.9 million barrels per day. Asian economies will also be the biggest driving force. Daily demand for crude oil in Asian economies increased by 3.3 million barrels compared with 2020, while OPEC forecasts estimated daily demand to decrease by up to 9.8 million barrels.
In addition, despite the raging new crown pneumonia, OPEC is very optimistic about the oil demand trend in North America, noting that the recovery of transportation fuels such as gasoline is closely related to the labor market and gasoline retail sales. related to price developments. At present, both variables above are showing considerable signs of recovery.
However, there is still no sign of recovery in European oil demand. The report stated that although European countries have tried their best to control the epidemic, sustainable blockades have obviously had a strong impact on oil demand.
The Organization of the Petroleum Exporting Countries (OPEC) recently released a monthly report showing that even if it restored some of its previously reduced production this month, OPEC’s supply to the global market is still low. on demand. Saudi Arabia, the organization’s largest oil exporter, recently announced new production cuts that will further deplete oil inventories in the next two months.
OPEC Secretary-General Mohammad Barkindo said on Wednesday that the main priority for the organization and its allies was to reduce the ” Stubbornly high” stock. “Our focus is on how to assist the market in accelerating inventory clearance so that the market can return to balance,” Barkindo said, adding that inventories in industrialized countries were still about 160 million barrels above the five-year average.
OPEC’s efforts have revived oil prices, with crude oil prices in New York trading above $53 a barrel, near a 10-month high. The report released by OPEC’s Vienna-based research unit on Thursday did not make any predictions about inventory trends, but it contained data that provided guidance on how supply and demand conditions will develop. It is calculated that if OPEC implements its plan to increase modest production by 500,000 barrels per day this month and Saudi Arabia fulfills its commitment to reduce production by 1 million barrels per day in February and March, the organization’s average daily output in the first quarter will be to 25 million barrels.
This is significantly lower than the 26.79 million barrels the organization believes the market needs, so global inventories will be consumed at a rate of 1.8 million barrels per day during the first quarter. OPEC kept its annual supply and demand forecast for 2021 unchanged but said first-quarter supply and demand conditions would be tighter than previously estimated as consumption rises and rivals’ output slows. Accelerating demand means oil inventories could fall faster in the second and third quarters, depending on what output policy OPEC and its allies choose.
The OPEC alliance, composed of 23 countries, will meet in March to discuss whether to further restore production. The report also points to a brewing challenge. Iran, which was slapped with crude oil export sanctions by U.S. President Trump, restored its daily production to about 2 million barrels in December. U.S. President-elect Joe Biden has expressed a willingness to revive the nuclear deal with Iran, which would allow Iran to significantly increase crude oil supplies, thereby undermining OPEC members’ efforts to keep the world oil market balanced.
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