OPEC Revenues

[dan_s]

"Elsewhere, the determination of members of the Organisation of Petroleum Exporting Countries to maintain and expand their market share has clearly been shown by the fact that at two ministerial meetings following the historic November 2014 decision not to cut production to support oil prices, ministers have resisted any temptation to change course. In mid-February some OPEC members and Russia agreed to freeze production and they indicated that further policy initiatives may follow. Rising oil production in 2015, notably from Iraq and Saudi Arabia, will now be joined by Iran, freed from nuclear sanctions. Within the time frame of this forecast we do not expect a major increase in the production capacity of either Iran or neighbouring Iraq due to political uncertainties, but this outlook could, towards the end of the period, be revised. In other OPEC countries we are seeing one of the downsides of low oil prices: massive economic retrenchment in countries such as Algeria, Nigeria and Venezuela will reduce their ability to invest in the oil sector. It is not our role to analyse political issues, but it is worth flagging up the potential implications for supply stability in countries that have seen their income collapse dramatically. For OPEC as a whole oil export revenues slumped from a peak of USD 1.2 trillion in 2012 to USD 500 billion in 2015 and, if oil prices remain at current levels, this will fall in 2016 to approximately USD 320 billion." - IEA Oil Market Report

[dan_s]

"Another downside to low oil prices is the impact on investment. The IEA has regularly warned of the potential consequences of the 24% fall in investment seen in 2015 and the expected 17% fall in 2016. In today’s oil market there is hardly any spare production capacity other than in Saudi Arabia and Iran and significant investment is required just to maintain existing production before we move on to provide the new capacity needed to meet rising oil demand. The risk of a sharp oil price rise towards the later part of our forecast arising from insufficient investment is as potentially de-stabilising as the sharp oil price fall has proved to be." - IEA Oil Market Report