OPEC Members’ Net Oil Export Revenue Expected to Fall

The U.S. Energy Information Administration (EIA) forecasts that members of the Organization of the Petroleum Exporting Countries (OPEC) will earn about $323 billion in net oil export revenues in 2020. If realized, this forecast revenue would be the lowest in 18 years. Lower crude oil prices combined with a decrease in export volumes are driving this expected decrease in export revenues.

Crude oil prices have fallen as a result of lower global demand for petroleum products caused by responses to COVID-19. Export volumes have also declined under OPEC agreements limiting crude oil output that were made in response to low crude oil prices and record-high production disruptions in Libya, Iran, and to a lesser extent, Venezuela.

OPEC earned an estimated $595 billion in net oil export revenues in 2019, less than half of the estimated record high of $1.2 trillion earned in 2012. Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programs, and support public services. EIA foresees a decline in net oil export revenue for OPEC in 2020 because of continued voluntary curtailments and low crude oil prices.

The benchmark Brent crude oil spot price fell from an annual average of $71/bbl in 2018 to $64/bbl in 2019. EIA expects Brent to average $41/bbl in 2020, based on forecasts in EIA’s October 2020 Short-Term Energy Outlook (STEO). OPEC petroleum production averaged 36.6 MMbbld in 2018 and fell to 34.5 MMbbld in 2019; EIA expects OPEC production to decline an additional 3.9 MMbbld to average 30.7 MMbbld in 2020.

EIA based its OPEC revenues estimate on forecast petroleum liquids production, including crude oil, condensate, and natural gas plant liquids, and forecast values of OPEC petroleum consumption and crude oil prices.

EIA recently published a more detailed discussion of OPEC revenue in This Week in Petroleum.

SOURCE: The Weekly Propane Newsletter, November 5, 2020. Weekly Propane Newsletter subscribers receive all the latest posted and spot prices from major terminals and refineries around the U.S. delivered to inboxes every week. Receive a center spread of posted prices with hundreds of postings updated each week, along with market analysis, insightful commentary, and much more not found elsewhere.