27 October 2014 - 15:33
  • News ID: 227667
Saudi Arabia, Main Victim of Falling Oil Prices

TEHRAN Oct 27 (Shana)--Falling oil prices to 85 dollars per barrel will reduce Saudi Arabia and Russia foreign exchange revenues respectively 67.2 and 56.1 billion dollars, implying the two countries' losses from falling oil prices will be the highest among oil exporting countries.

Currently world oil demand stands at 92.6 million barrels per day, a report by IEA announced, adding average oil demand will reach 92.89 million barrels next year, of which OPEC and Non-OPEC share of world oil supply is estimated at 29.56 and 57.16 million barrels per day, respectively.
Shrinking oil prices by 20 dollars or more than 20 percent over the last three months has led to dramatic fall in oil revenues of oil exporting countries meaning 1.852 billion dollars lower revenue on a daily basis.
Since mid-July, falling oil prices have trimmed oil revenues off OPEC and Non-OPEC countries about 170 billion dollars, of which 54 billion dollars have been lost by OPEC.
In case of continuation of prices at 85 dollars, oil exporting countries will lose another 678 billion dollars of which 213 billion dollars will be lost by OPEC.
The impact of falling oil prices will not be confined to oil revenues but it will influence gas, petrochemicals, gas condensate and oil refining prices. These developments are estimated to reduce foreign exchange revenues of oil-dependent economies more than 1.000 billion dollars.
While earlier WTO had predicted world’s economic growth would reach 4.7 percent in 2014 and 5.3 percent in 2015, the latest estimate by the organization indicates that global trade will grow by 3.1 percent this year and 4 percent next year.  
WTO in its report has said that less than expected growth and geopolitical risks are among the elements having negative impact on world economic growth.
Less than expected economic growth and mounting geopolitical risks have created some problems for Europe which its exports make up one third of total exports of the world. Central and South American countries’ economies have also experienced losses mainly due to falling demand in China. These developments alongside with falling oil revenues of oil exporting countries are worsening world economy status.  
The latest statistics released by World Bank also indicate that falling oil prices from 105 to 85 dollars per barrel is expected to reduce Saudi Arabia and Russian oil revenues respectively 67.2 and 56.1 billion dollars.
Thus, it seems Saudi Arabia and Russia with 336 and 240 billion dollars annual oil revenues will probably be the main losers of falling oil prices. These developments also means that if the two countries decide to negate the impact of falling oil prices, which has fallen by nearly 20 dollars per barrel, they need to raise their daily oil production by 2.166 million and 1.808 million barrels.
On the other hand, falling oil prices will not put too much pressure on Iran’s economy. Tehran has various options to neutralize the impact of falling oil prices on its budget. It is estimated Iran’s oil revenues to shrink by 7 billion dollars assuming average oil prices remain at 85 dollars per barrel. Reducing budget’s reliance on oil revenue is the most important solution to cope with the problem while the Supreme Leader’s foreseeing and announcing the Economy of Resistance policies as well as the Government of Prudence and Hope plans have already prepared the groundwork for dealing with the falling oil prices problem.    
Now it seems that political means the U.S and Saudi Arabia resorted to them for putting pressure on Russia has backfired on industrial world and oil exporting countries in a way that Saudi Arabia is the first oil exporting country facing the self-made crisis.
Global economy slowdown along with less dollar dominated transactions, falling demand for industrial countries’ commodities as well as cutting production of shale oil in the U.S, due to being uneconomical, are among the elements that will have an impact on the U.S economy and Washington in its turn will gradually sense the bitter taste of recession.
News ID 227667

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