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Reuters: OPEC countries lose $ 500 million a day due to the oil price collapse, today, Monday, March 9, 2020 07:51 pm
In most cases, oil tops the list of sources of income for members of the Organization of the Petroleum Exporting Countries, and such a sharp drop in prices will put pressure on their economies, some of which are already, like Iran and Venezuela, on the edge of the abyss.
Brent crude futures incurred a significant loss of about 31% to $ 31.02 today, Monday, the lowest level since mid-February 2016, and at this low level, prices are about $ 20 a barrel lower than the peak before the “OPEC” meeting and its allies in March 6.
According to Reuters calculations, this means that overall, based on their average production in February, OPEC members lost revenues of more than $ 500 million.
The losses are even more evident when compared to the high level reached by Brent last January, at $ 71.75 a barrel.
The “OPEC” was pushing in the direction of increasing the current cuts with its allies, within the framework of what is known as the “OPEC +” group, by an additional 1.5 million barrels per day to more than 3 million barrels per day until the end of the year, but Russia rejected the proposal, which caused the collapse of the alliance A price war has erupted over market shares.
For some countries, including Saudi Arabia, one of the richest members of the organization, the oil price that achieved fiscal breakeven points was already much higher than oil prices before the latest collapse.
Jan Friedrich, Director of Sovereign Ratings for the Middle East and Africa at Fitch, said, “The drop of $ 10 a barrel in oil prices reduces financial revenue between 2 and 4% of GDP, depending on the country, and the prices that achieve the fiscal break-even point are much higher than the current levels for all GCC countries. Gulf Cooperation. ”
He added, “But at least the highest rated countries, especially Kuwait, Qatar and the UAE, have abundant fenders, mainly in the form of sovereign wealth funds.”