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Post: How do the biggest oil and gas producing countries benefit from higher prices and incomes?


The conflict in Ukraine helped push Brent crude to a 14-year high of $139.13 a barrel last March, boosting gains for major producers.

Brent crude has averaged $104.34 a barrel this year, compared to $66.63 in 2021. Data from Saudi Arabia, Russia, Nigeria and Iraq show how not all major producers are benefiting from prices. higher than oil.

  • Saudi Arabia

The world’s largest crude oil exporter reported oil revenue of 434.1 billion riyals ($115.5 billion) in the first half of 2022, up 74.5% from the same period last year. The kingdom expects to post its first fiscal surplus in nearly a decade in 2022.

Saudi Finance Minister Mohammed al-Jadaan said windfall oil profits could be financed by investment fund The public sector, on which the kingdom depends for plans to diversify its economy beyond oil, has doubled its assets in about two years, including construction. Big cities in the desert.. He added that the money can also be transferred to a cash reserve or the National Development Fund, which oversees economic development funds and pools them.

The government expects economic growth of 7.4 percent this year, while the International Monetary Fund predicts 7.6 percent. The International Monetary Fund expected in April that Saudi Arabia would need an oil price of $79.2 a barrel to balance its budget.

  • Nigeria

does not benefit Nigeria of high oil prices, according to monthly tabulations of federal transfer data published by the National Petroleum Company. The company did not transfer money to the federal account for the first eight months of 2022, even as oil and gas sales surpassed pre-pandemic 2020 levels.

Nigeria spends huge amounts of money importing gasoline and loses crude oil revenue in the process. It replaces 40% of its crude oil production with gasoline, and an estimated one-third of these gasoline imports are smuggled into neighboring countries.

In addition, Nigeria buys money for extra expensive spot remittances and then the government also pays subsidies to the national oil company.

Company transfers are the biggest contributor to the public treasury. Oil and gas sales totaled $1.26 billion in February 2022, but the company failed to raise in March. As of February 2021, Nigeria has earned around $792 million and sent over $100 million.

The finance minister said the government had budgeted for production of 1.8 million barrels a day in 2022, although data from the National Oil Company shows production after January-December 2021 averaged 1.4 million. of barrels per day. Revenues already allocated from the public treasury. By mid-2022, production had dropped from 1 million to 1.2 million barrels a day.

  • Iraq

grown up Iraqi revenuewhich mainly depends on oil sales, significantly following the rise in oil prices ukrainian war According to official data released by the Ministry of Petroleum, it generated US$33 billion in revenue in March, April and May 2022, compared to just US$17.25 billion in the same period in 2021.

But windfall gains don’t help. country’s economy Exhausted because Iraq still does not have a government to ratify the 2022 federal budget, months after the October general election due to its bitter political impasse.

Ahmed Musa, a spokesman for the Ministry of Electricity, said that doubling oil revenues is pointless and that the country cannot spend a single dinar without a permanent government and a new budget to spend the financial allocations. According to him, there is not enough money to buy electricity and gas.

  • Russia

grown up oil and gas revenue Russia’s budget grew 43 percent between January and August from last year, allowing the government to increase public spending to lessen the impact of Western sanctions.

Russia’s total oil and gas revenue from January to August was 7.3 trillion rubles ($121.7 billion), or 82% of projected revenue for 2022. But in July and August, oil and gas revenues gas fell year on year.

set the west Unprecedented economic and financial sanctions against Russia Due to what Moscow calls a “special military operation” in Ukraine that began on February 24, it effectively isolated the export-dependent economy from the global financial system.

Finance Minister Anton Siluanov said in late May that Russia needed “huge resources” for its military operation in Ukraine, and the economic stimulus budget is estimated at eight trillion rubles ($133 billion), headed for military expenses.

According to preliminary data from the Ministry of Finance, Russia does not disclose the cost of military operation in Ukraine, but its total defense spending increased by 40% in the January-April period to 1.7 trillion rubles.

Russia is now at risk of cutting oil exports to Europe following the latest sanctions, which would have eliminated Russian oil rather than an immediate ban, giving Moscow some time to re-export volumes to new customers in Asia. for the next six months.

Russia can use increased oil and gas revenues to increase social benefits, which have already begun.

Source: EuroNews

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