The Wall Street Journal Benoit FAUCON
Revenue from petroleum exports in the Organization of the Petroleum Exporting Countries broke a new record in 2012 but the earnings of some members are declining amid higher budgetary needs, underscoring a deepening rift between producers benefiting from higher oil prices and those who don't.
Mounting inequalities within OPEC come ahead of an expected debate later this year over whether it should formally cut its production for the first time in five years.
In its annual statistical report, OPEC said its oil exports revenue, which include crude, natural-gas liquids and products, rose by 9.2% to $1.261 trillion in 2012, compared to a previous record of $1.155 trillion the previous year.
Gulf Arab monarchies took advantage of higher oil prices and of a gap left by Iranian sales hit by sanctions. While Saudi oil revenue rose by 6%, Iran's earnings from the commodity fell by 12%.
But others have also been hurt by new competition from booming U.S. oil shale. Algeria's oil-export revenue fell by 6% as the price of its flagship Saharan Blend crude fell by 1.3% in 2012 amid weakening U.S. demand. The drop in revenue also stemmed from lower sales of its profitable products amid refining problems.
The lower exports earnings affect members that can least afford it. In a closely-watched analysis, the Arab Petroleum Investments Corp., or Apicorp, which was set up by Arab oil producers, said the oil price Iran needs to balance its budget has risen to $144 a barrel this year from $127 in 2012. By contrast, Saudi Arabia's break-even price has only increased from $94 per barrel in 2012 to $98 in 2013.
Algeria, which has been rattled by frequent riots over food and housing, needs an oil price of $121 a barrel to cover its planned domestic expenditure, according to the International Monetary Fund. That's higher that the average price of $107.9 a barrel in the first six months of 2013 for Brent, the most widely used international oil benchmark.
The difference in budgetary needs between members "casts doubts on the ability of OPEC to act as a group of peers," wrote Ali Aissaoui, the senior consultant at APICORP who authored the study. "Countries whose fiscal costs are higher than the market price would try and persuade the opposite side to lower the aggregate production ceiling."
OPEC currently has a production ceiling of 30 million barrels a day, although delegates of the group have suggested it could be cut because forecasts show lower needs for its crude next year.
Following unrest that have toppled or threatened several long-term leaders in the Arab world, most governments in the Middle East and Africa have sharply increased their social spending.