The bleak economic data from the world's industrialized economies obviously do not bode well for major oil producing countries, notably those in the OPEC. The expected drop in demand for oil as a consequence of feeble economic activities in the advanced countries would dent the revenue of OPEC from oil exports. According to the US government's top energy forecasting agency, the Energy Information Administration, falling crude oil prices will cost OPEC about $79 billion in lost oil export revenue this year and almost $100 billion in 2009. Net oil export earnings from OPEC are projected to hit a record $1.172 trillion this year, the agency said this week in its latest energy forecast. While OPEC's earnings in 2008 would still be 75 percent higher than the $671 billon the group earned last year, it would be $79 billion less than the EIA had forecast last month. OPEC's expected drop in export earnings reflects lower petroleum demand and the steep fall in oil prices, which have declined about $33 a barrel over the past month and are projected to be much lower than previously forecast. For 2009, the oil producer group's crude export earnings are expected to reach $1.225 trillion, $97 billion less than the EIA forecast last month. Through the first seven months of this year, OPEC members had already raked in about $642 billion from their oil exports, with Saudi Arabia accounting for the biggest share at $191 billion, the EIA said. Compounding the discouraging outlook on OPEC's oil revenue amid poor economic developments in the industrialized countries, is the recovery of the US currency in the world markets. The EIA reported earlier this week a bigger-than-expected drop in gasoline supplies, aside from decline in demand for refined fuel products. A stronger dollar this week is also helping to push oil prices lower. The dollar rose to above 110 yen on Friday while the euro weakened to $1.4716. “With the dollar gaining strength against the euro and yen, oil and other commodities have come down,” analysts said. “Oil is not so much a hedge against a falling dollar anymore,” one trade added. Oil dropped more than $2 to $112 a barrel on Friday on growing concerns about demand in industrialized nations. US crude fell $2.67 to $112.34 a barrel, after dipping down to $111.34 a barrel, the lowest level since May 2. London Brent lost $2.52 to $111.16 a barrel. An OPEC forecast of lower demand also put downward pressure on prices. In its monthly oil report, the organization forecast that world appetite for oil for this year overall will have fallen by 30,000 barrels a day. While forecasting demand growing by a daily 1 million barrels a day this year, and another 900,000 barrels in 2009, it noted that world demand growth next year will be “the lowest since 2002,” with noticeable fall in the major industrialized countries. __
