for the oil importers, the situation is quite different. Because for them - first of all - the decline in the price of oil is a benefit. Their current account would improve, because the cost of imports would have gone down.
EXPORT EARNING: Oil price had been falling since 2012. It was predicted to fall in 2014 and continue to fall in 2015. The chart shows that the falling "trend" would seem to continue through the remaining years of 2000' decade. See link below. By 2013 figure, the net export earnings from oil export among OPEC members was $821. if the trend continue this earning will be reduced. If that plays out, the GDP among OPEC country might also be affected unless there is a shift in GDP production in other sectors.
EFFECT ON GDP: Since part of the GDP calculation is net export earning and if the export earning from oil will be reduce, the total GDP will be adversely affect unless the loss from oil export is replaced with other variables in the GDP equation. Policy makers in the OPEC group would have to rethink strategy for sustained economic growth if the current oil market situation continues.
OPEC AND THE NEW MARKET: Currently OPEC has 6 members from the Middle East, 4 members from Africa and 2 members from South America. There are other current and potential oil producers who do not belong to OPEC---and may not join the group in the foreseeable future either for policy or political reasons. These current and potential producers include: Russia, US, Canada, China, Vietnam, Malaysia, Indonesia, Philippines, Thailand, Myanmar, etc. Other major economies, such as India, Japan and South Korea also have significant oil reserves. When these countries put forth their production, OPEC would have less influence in the market. However, as an experienced producer, OPEC would remain an active player in the market---may be in a slightly modified role with its better placed position in the learning curve on oil production.
COUNTRIES WITH OIL RESERVE: See map here: http://en.wikipedia.org/wiki/List_of_countries_by_proven_oil_reserves#mediaviewer/File:Oil_Reserves_Updated.png
http://www.eia.gov/todayinenergy/detail.cfm?id=19231
http://en.wikipedia.org/wiki/Global_strategic_petroleum_reserves
Good question. As an industrial chemist & as one who belongs to a country in which there is no petroleum, I shall give an impartial scientific opinion. To evaluate the price for a crude oil barrel, I have learnt that it ought to be compared to the cost of a barrel of syncrude “synthetic crude oil” which is not less than 120$. One may wonder but,e.g. isn't the price of natural diamond near that of synthetic diamond? A drop in the market value has to be followed immediately by reduction of producing natural crude oil. If an exporting country does not do that, then its undergoing self-destruction.
I would say we should also focus on the future of subsidies especially in Gulf countries. I assume that low oil prices would help Gulf states to have a chance of cutting (or even cancelling (subsidies when the prices are low, without being faced to any public unrest. Increasing local consumption is the main problem in the future export earning forecasts and I guess it would be a lot more beneficial for Gulf and other MENA states, in long term, as decreasing local consumption will increasing competition power in global oil and gas market.
Seven Questions About The Recent Oil Price Slump
http://blog-imfdirect.imf.org/2014/12/22/seven-questions-about-the-recent-oil-price-slump/
Lower oil prices have weakened the external and fiscal balances of oil exporters, including members of the Gulf Cooperation Council (GCC). Large buffers and available financing should allow most oil exporters to avoid sharp cuts in government spending, limiting the impact on near-term growth and financial stability. Oil
exporters should prudently treat the oil price decline as largely permanent and adjust their medium-term fiscal consolidation plans so as to prevent major erosion of their buffers and to ensure intergenerational equity. See
http://www.imf.org/external/pubs/ft/reo/2015/mcd/eng/mreo0115.htm
http://documents.worldbank.org/curated/en/2015/01/23884278/plunging-oil-prices
Dear Hussein
The Middle East has long been a huge supplier of oil. For the past half a century, countries in this region have been extracting the substance from the Earth and selling it around the world. Because the Middle East has essentially controlled the world’s oil supply for decades, the region has experienced enormous economic growth – to the point where countries such as Saudi Arabia are among the richest in the world.
Even though oil has gone through rough periods in the past, the Saudi economy has been able to recover. But will it be able to sustain its growth with oil hovering around $40 per barrel? While things for the Saudis don’t look quite as bad as they have for Greece, there may be some troubling times ahead for Saudi Arabia. (For more, see How Petro Economies Are Coping with $40 Oil.)
Read more: How Cheap Oil Will Hurt the Saudi Arabian Economy | Investopedia http://www.investopedia.com/articles/investing/091515/how-cheap-oil-will-hurt-saudi-arabian-economy.asp#ixzz4V4U464C9
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