Oil Revenues Reach Record Highs

Sources: Financial Times—Record Prices Deliver $658bn to Opec

Crude oil revenues are expected to reach $658bn this year. This is a 9 percent increase from 2006. The Energy Information Administration guesses that revenues will continue to increase even more in 2008 to approximately $763bn, a 16 percent increase from this year. This increase is most likely caused by the strong oil prices and output increases. The increase in oil income is aiding Opec’s members, like Venezuela and Iran, to take advantage of their political force. Many Opec members, as a result, have become involved in huge development projects in their home countries. The continued revenue increases have helped give Opec member countries much more power.

The oil surge facilitated Iran’s President Mahmoud Ahmadi-Nejad to endure the blow by United Nations and U.S. sanctions. These sanctions were endorsed to deter the government from pursuing nuclear ambitions.

The benefits Iran has incurred may actually hurt Saudi Arabia. The Saudi Arabian government is now under pressure to raise output. This may obscure diplomatic resolution to the Iranian nuclear problem. The extra oil revenues helped internal security in fighting against al-Qaeda. The Saudis wanted stable prices so oil prices would not collapse. Saudi Arabia’s 2007 oil income is expected to increase by 19 percent due to higher prices and production.

Discussion question:
Will Middle East countries join forces and, as a result, increase their political power? Will the United Nations increase the severity of sanctions as Middle East countries gain more independence?