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The rapid increase in hydrocarbon export revenues since 2004 has helped trigger a sharp rise in government spending in Opec countries. Coupled with lower export volumes aimed at underpinning high oil prices, and a loss in purchasing power from the weak US dollar, this has started to undercut Opec's aggregate current account surplus. But the surplus remains large and is likely to be long-lasting, writes Sharif Ghalib, senior analyst at Energy Intelligence Research.
With oil prices nudging record highs this month, Opec looks set to enjoy average Brent prices of at least $70 per barrel or more this year, above previous projections (EC Feb.16,p3). This should offset the decline in Opec export volumes from price-supporting cuts, resulting in projected oil revenues of at least $493 billion in 2007, about the same as last year, and a $20 billion increase in total exports to $820 billion when sales of natural gas, petrochemicals and other exports are taken into account (see table). For each $1/bbl change in the average oil price from the $70 base for 2007, Opec's gross oil export earnings increase or decrease by about $13 billion, assuming export volumes remain unchanged.
At the same...