I calculate that world oil revenues peaked this year at an annualized rate of $3.8 trillion during June. I do so by multiplying monthly global oil demand (in millions of barrels per day) by 365 days and by the price of a barrel of Brent.
The 40% drop in the price of Brent since June reduces those revenues by a whopping $1.5 trillion at an annual rate. Those losses are staggering and are bound to depress global capital spending by the oil industry and reduce the availability of cash to finance fracking in the US. In other words, low oil prices will eventually be the cure for low oil prices.
I calculate that OPEC’s revenues peaked this year during June at an annual rate of $1.5 trillion based on the cartel's actual monthly output. Saudi Arabia’s revenues also hit this year’s high during June, at $391 billion. The 40% drop in the price of Brent reduces the revenues of OPEC and Saudi Arabia by $590 billion and $160 billion, respectively, at an annual rate.
For oil users, falling oil prices are a huge windfall, which is equal to the drop in global oil revenues. In the US, I calculate that the current annualized windfall--since June and based on the 40% drop in oil prices--amounts to $291 billion. In Western Europe, it amounts to $221 billion, or €163 billion. In Asia and Latin America, I calculate windfalls of $484 billion and $107 billion, respectively.
Today's Morning Briefing: Cheap Oil. (1) OPEC agrees to do nothing. (2) 40% discount just in time for the holidays. (3) Winners and losers. (4) Big wipeout for producers equals big windfall for consumers. (5) US drivers could save more than $200 billion. (6) Dow Theory suggests melt-up in Transports could spread to broad market. (7) Big windfall for many EMs. (8) Oil price plunge adding to deflation and prolonging NZIRPs. (9) Bonanza for bond investors. (10) The latest round of central bank puts. (11) Performance since October 15. (12) The Hunger Games: Mockingjay, Part 1 (- - -). (More for subscribers.)
The 40% drop in the price of Brent since June reduces those revenues by a whopping $1.5 trillion at an annual rate. Those losses are staggering and are bound to depress global capital spending by the oil industry and reduce the availability of cash to finance fracking in the US. In other words, low oil prices will eventually be the cure for low oil prices.
I calculate that OPEC’s revenues peaked this year during June at an annual rate of $1.5 trillion based on the cartel's actual monthly output. Saudi Arabia’s revenues also hit this year’s high during June, at $391 billion. The 40% drop in the price of Brent reduces the revenues of OPEC and Saudi Arabia by $590 billion and $160 billion, respectively, at an annual rate.
For oil users, falling oil prices are a huge windfall, which is equal to the drop in global oil revenues. In the US, I calculate that the current annualized windfall--since June and based on the 40% drop in oil prices--amounts to $291 billion. In Western Europe, it amounts to $221 billion, or €163 billion. In Asia and Latin America, I calculate windfalls of $484 billion and $107 billion, respectively.
Today's Morning Briefing: Cheap Oil. (1) OPEC agrees to do nothing. (2) 40% discount just in time for the holidays. (3) Winners and losers. (4) Big wipeout for producers equals big windfall for consumers. (5) US drivers could save more than $200 billion. (6) Dow Theory suggests melt-up in Transports could spread to broad market. (7) Big windfall for many EMs. (8) Oil price plunge adding to deflation and prolonging NZIRPs. (9) Bonanza for bond investors. (10) The latest round of central bank puts. (11) Performance since October 15. (12) The Hunger Games: Mockingjay, Part 1 (- - -). (More for subscribers.)
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