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Opec’s oil export revenue to plunge 34% lower in 2016

Low crude prices and production outages have caused the group’s earnings to plummet

Opec's oil export revenue will fall to just $341bn this year, according to estimates from the US Energy Information Administration (EIA).

That's down from the $518.2bn the oil producer group reported in export earnings last year, which was a 46% drop from 2014 levels and the lowest in a decade.

Opec said that in 2015 it posted a current account deficit of $99.6bn, compared with a surplus of $238.1bn in 2014. Last year was the first time the group had recorded a current account deficit since 1998, when the group was $19.46bn in the red.

The EIA has estimated Opec's 2015 oil export revenue was much lower than the producer group has reported, at just $404bn. It's a 46% fall from the $753bn the EIA estimated Opec's export revenues were in 2014. The group reported its export revenue in 2014 was slightly lower, at $751bn.

Next year the EIA expects Opec's export revenue to rise to around $427bn, based on the assumption that international crude prices will rise as the pace of global stock draws increases. The Administration expects Brent prices will average around $52/b in 2017, up from around $43/b in the second half of this year.

Brent futures were trading around $48/b at the end of August.

Iran's resurgence

The EIA said that its estimate of the group's export earnings last year does include Iran, which was subject to financial sanctions at the time, but it has not been adjusted for possible price discounts the country may have offered between late 2011 and January 2016.

Since emerging from sanctions at the beginning of this year Iran's oil output has increased by more than any other Opec member, reaching 3.6m barrels a day in July.

Opec will hold an informal meeting in Algiers at the end of September to discuss whether to implement a group-wide production freeze or cut.

Unlike the meeting in Doha earlier this year Iran has agreed to take part in the talks.

Tehran is targeting 4m b/d as soon as possible, or roughly its level before sanctions. Wood Mackenzie - a consultancy - estimates the Islamic Republic's output could reach 4.5m b/d by 2025 if it manages to secure the investment in needs in aging oilfields.

Even if Iran does manage to ramp up oil output by another 400,000 b/d by the end of this year it is unlikely to flood the market and depress prices further. The country's exports are likely to remain at around 2.2m b/d this year, according to Wood Mackenzie.

Saudi Arabia's output, which reached a record 10.62m b/d in July, will likely fall back from September as seasonal demand eases.

Meanwhile Nigeria still has around 0.5m b/d of crude production offline due to ongoing militant attacks on pipelines. The West African country's economy slipped into recession in Q2, making it more difficult for the cash-strapped government to offer financial incentives to the various militant groups to ease attacks on oil infrastructure.

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