x Abu Dhabi, UAEFriday 28 July 2017

Opec tops $1 trillion in revenue

Opec producers' oil revenues topped the unprecedented $1 trillion mark last year as the price of oil averaged above $100 a barrel for the first time. But the windfall contrasts with a current slump.

Opec producers' oil revenues topped the unprecedented US$1 trillion (Dh3.67tn) mark last year as the price of oil averaged above $100 a barrel for the first time.

But last year's windfall contrasts with a current slump in oil prices, which brought the cost per barrel to an 18-month low yesterday.

Oil receipts surged to $1.03tnlast year, an increase of 39 per cent on the year before, Opec said in its annual report released this week.

"The year 2011 was a turbulent one and affected by many largely unexpected events and circumstances, which, in the end, did not play out as negatively as they could have," the report said.

Revenues were boosted by high oil prices. Driven by supply constraints arising from the civil war in Libya and reduced exports from other African producers, the Opec basket price rose to a yearly average of $107.46 a barrel. It was the first time the basket, an aggregate of the prices fetched by Opec members, surpassed the $100 a barrel mark.

Libya's exports came to a halt in February last year and only resumed towards the end of the year.Despite the shortfall, Opec managed to increase output by more than half a million bpd, to a yearly average of 29.77 million bpd, said the report.

As oil prices surged further at the beginning of the year on fears that crude exports out of the Arabian Gulf could be interrupted by the escalating stand-off between Iran and the West, Opec responded by increasing the output at its pumps.

Combined with the resumption of nuclear talks between Iran and the G5+1 group (China, France, Russia, the United Kingdom,the United States, plus Germany) and a deterioration of the world economy, this policy succeeded in bringing down prices. Brent fell under $100 a barrel earlier and yesterday briefly touched on an 18-month low of $94.63 a barrel.

This casts doubts on whether Opec will achieve a similar return from sales this year.

"It will be interesting if the average price this year will be so strong," said Bill Farren-Price, the head of the consultancy Petroleum Policy Intelligence. "It is in [Opec's] interest to have more moderate oil prices."

fneuhof@thenational.ae