The US Department of Energy’s Energy Information Administration has released its August estimate of net revenue that the EIA expects to OPEC countries to earn in 2010 and 2011. The numbers don’t get back to 2008 levels, when prices topped $140/b, but that’s the direction they’re headed.
In 2008, OPEC pulled in net revenue of $964.7 billion, a stupendous number. The price of crude collapsed in 2009, and OPEC saw its revenue fall by 41%, to $570.5 billion. For 2010, the EIA is estimating that OPEC revenue will rise to $752.4 billion, a jump of 32%. For 2011, EIA estimates OPEC revenue at $821.1 billion, a mere 9% rise over 2010.
The EIA estimates are based on an OPEC average per barrel spot price of $77.52 as of August 13th. Higher priced WTI crude spot prices are expected to average $81/b by the end of 2010 and $84/b in 2011.
EIA expects OPEC crude production to rise by 1 million b/d in 2010 and 1.2 million b/d in 2011. Surplus capacity is expected remain right around 5 million b/d, with about 4.5 million b/d attributed to Saudi Arabia.
Global consumption of crude oil is expected to increase by 1.6 million b/d in 2010, with most of the growth coming from China, Saudi Arabia, and Brazil. EIA projects that global consumption in 2011 will rise another 1.5 million b/d.
US consumption is expected to rise by 150,000 b/d in 2010 and by the same amount again in 2011.
The interesting bit here is that Saudi Arabia’s demand for crude is expected to grow and the country’s net exports are expected to fall. One analyst expects Saudi production to decline by 5%, consumption to rise by 2%, and net exports to decline by 15%.
The Saudis also see crude demand from emerging markets peaking in the next 10 to 15 years. This is not good news for the Saudis, who get about 90% of government revenues from oil and 60% of GDP from oil exports. Developed countries have already reached peak demand for oil according to the International Energy Agency.
Demand for crude from developing nations will keep crude prices high for the next decade at least, and maybe longer if no major shift occurs in transportation fuel.