Daily Management Review

Revenues from Arab oil exports fell by $ 24 billion


07/19/2016


Exports of crude oil from Arab countries amounted to $ 50.4 billion in the I quarter of this year, local media reported.



This is $ 24 billion less than volume of crude oil exported by the Organization of Arab Petroleum Exporting Countries (OAPEC) in the first quarter of 2015.

This reduction is a consequence of the sharp drop in oil prices, which fell below $ 30 per barrel at the beginning of 2016. 

In its monthly review, OAPEC said that the Arab oil-exporting countries are facing serious problems, caused by falling oil prices. These issues go beyond the energy sector and are negatively reflected in other industries and sectors of national economies.

As a result, according to OAPEC’s report, there is a negative impact on the level of consumption and government spending.

Plans to reduce the damage involved use of state reserves to compensate for the budget deficit, as well as reduced capital spending on public projects.

Current expenditure, however, remained intact, as well as most of the subsidies on basic consumer goods.

The organization also notes that the effect of such measures will be noticeable no sooner than in the medium or long term, and that there is still a need for further measures to stimulate the growth of economies and sustainable economic growth.

Emphasis is placed on privatization in a number of sectors - from tourism to telecommunications. The experts hope that revenue from these sectors will be growing while costs associated with the responsibility for managing these sectors will be reducing.

In addition, OAPEC member countries such as the United Arab Emirates, Qatar and Kuwait, are counting on their sovereign wealth funds. Saudi Arabia is planning to join them by establishing the world’s largest sovereign fund. 

Council for the Gulf Cooperation is also working on a common tax reform that could bring common VAT system for the member countries.

Overall, OAPEC in its report concludes that the member countries of the Organization succeeded in the way of reform, the need for which has been caused by the fall in oil prices.

However, they still have to travel a long hard way. One of obstacles here is legislation, which needs to be updated. Above that, there is also need to borrow more, and that is what OAPEC member countries do not like to do.

According to preliminary estimates as of April 2016, world oil demand grew by 0.4%, or 0.4 million barrels per day compared to the previous month, and reached 96.1 million barrels per day. This is an increase of 1.3 million barrels per day compared with last year's level.

Demand in OECD countries fell by 1.3%, or 0.6 million barrels per day, compared to the previous month and reached 45.9 million barrels per day, which was a rise of 0.3 million barrels per day compared with the level of last year.

Demand in the non-OECD countries increased by 2%, or 1 million barrels per day, compared to the previous month and reached 50.2 million barrels per day, it is an increase of 0.9 million barrels per day compared with last year.

If we talk about supply, then, according to preliminary estimates at April 2016, the volume of world oil supplies remained unchanged compared to the previous month, and amounted to 98 million barrels a day. This is 1.7 million barrels per day higher than in the past year.

In April 2016, supply of crude oil and condensates in the OPEC countries decreased by 0.3%, or 0.1 million barrels a day, compared to the previous month and amounted to 39.4 million barrels a day, which is 1.2 million barrels per day higher than last year.

In addition, according to preliminary estimates, supply from countries outside OPEC remained unchanged compared to the previous month at 58.5 million barrels a day. The figure is 0.4 million barrels per day higher than last year.

Preliminary estimates of supply and demand in the April 2016 show a surplus of 1.9 million barrels per day, compared with an excess of 2.2 million barrels per day in March 2016 and in excess of 1.5 million barrels per day in April 2015.

source: oilprice.com






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