OPEC Takes an Economic Punch
One of the clearest indications of the financial toll from the severe drop in oil prices over the past two years can be seen in the news of OPEC posting a deficit for 2015. That red ink marks the first time in 17 years that the cartel has had a financial setback.
What had been a budget surplus of $238.1 billion in 2014 for OPEC changed drastically to a deficit of just under $100 million last year. The $99.6 billion shortfall was based on $518.2 billion in revenue and was a drop of 45.8 percent from the year before.
Before that slide began, the price of a barrel of oil had been as high as $110. However, by January of this year, the price had skidded to a low of $27, which was actually higher than some oil experts had projected. On average, the price of oil was listed at $49.49 in 2015, which is almost half of the $96.29 that OPEC nations had enjoyed just 12 months earlier
The last time OPEC received this sort of news was in 1998, when Asia was enveloped in a financial crisis. That economic disaster, coupled with a battle over market shares between Saudi Arabia and Iran, drove down the price of a barrel of oil to just $10.
Saudi Arabia still tops the list among the world’s oil producers at 10.19 million barrels per day, though Russia is close behind at 10.11. Even with the drop in prices, that production was needed to fill the surging need of people in the Middle East, as well as those in Asia Pacific and Africa.
In truth, such a deficit is likely to only be a blip on the financial radar, given the decades of ample surpluses that the organization has enjoyed.