• 1 day Shell Oil Trading Head Steps Down After 29 Years
  • 2 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 2 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 2 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 2 days Venezuela Officially In Default
  • 2 days Iran Prepares To Export LNG To Boost Trade Relations
  • 2 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 2 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 2 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 3 days Rosneft Announces Completion Of World’s Longest Well
  • 3 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 3 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 3 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 3 days Santos Admits It Rejected $7.2B Takeover Bid
  • 3 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 3 days Africa’s Richest Woman Fired From Sonangol
  • 4 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 4 days Russian Hackers Target British Energy Industry
  • 4 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 4 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 4 days Lower Oil Prices Benefit European Refiners
  • 4 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 5 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 5 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 5 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 5 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 5 days OPEC To Recruit New Members To Fight Market Imbalance
  • 5 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 5 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 5 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 6 days GE Considers Selling Baker Hughes Assets
  • 6 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 6 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 6 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 6 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 6 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 8 days The Oil Rig Drilling 10 Miles Under The Sea
  • 9 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 9 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 9 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
Goldman: Automated Trucks To Cost 300k Jobs Per Year

Goldman: Automated Trucks To Cost 300k Jobs Per Year

The race for automated trucking…

Iraq Struggles To Keep Oil Exports Elevated

Iraq Struggles To Keep Oil Exports Elevated

Iraq is struggling to offset…

OPEC May Cull Weaker Members

OPEC May Cull Weaker Members

While much has been made of the oil price war theories lately, whether it is a direct competition between the United States and Saudi Arabia, or whether the two are in collusion to cripple the Iranian and Russian economies, there is another aspect to the current situation that is worth considering.

OPEC revenue

Source: EIA

In this chart, we see OPEC revenues declining by approximately 8% from 2013 to around the $700 billion mark. With the recent PR campaigns by OPEC oil ministers explaining the cartel’s November 27th decision not to cut output as good capitalism and claiming that they never will cut regardless of the price of crude, the forecast for OPEC revenues for 2015 may beg to differ.

Related: OPEC Ministers Decry Price War Conspiracy Theories

Should prices remain at current levels, the cartel could lose almost $400 billion in annual revenue by 2015, a 50% drop from 2013 levels. While the several of the Arab member states have huge currency reserves to support their economies, this level of decline in revenue would be completely unsustainable for some of the more at-risk members of the cartel such as Iran, Nigeria and Venezuela.

OPEC Breakeven prices

Source: Wall Street Daily

OPEC accounts for 40% of the world’s crude oil production. Within OPEC, Saudi Arabia, Kuwait and Iraq together hold over half of the cartel’s revenue between them.

OPEC Net Oil Revenues 2013

Source: EIA

Related: OPEC Calls For Widespread Production Cuts

With this in mind, it could be that these three members of the cartel are fully aware of the new reality in the oil markets, and that a new era of sub $80 oil is more likely than not. When a former head of OPEC states that the cartel has lost its influence over the energy markets it may not be just major oil companies hoping to downsize their operations.

Adding credence to this theory is the worrying news coming from OPEC member Venezuela, who looks to be in severe danger of default. If the overabundance of oil continues much longer in to 2015 then it may no longer be worthwhile maintaining the memberships of economically unsustainable members.

By Evan Kelly of Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment
  • ted medley on December 24 2014 said:
    the devil must go.his name is obama.make more enemies then friends,you got trouble.let the world run itself and look after the people that put you there.oil wars,money wars, will come back to haunt you.dont push putin.

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News