Iran Oil Revenue Shrinks by 30% on Price Decline, Rouhani Says
Irans revenue from crude sales, the OPEC member nations most important export, dropped 30 percent because of the recent drop in global oil prices, according to President Hassan Rouhani.
International conditions are such that the countrys main source of income, i.e. oil revenues, has been cut by some 30 percent, Rouhani said in remarks to the nations parliament that were published today by the Oil Ministrys news website Shana. We have to deal with the new conditions and the global economic conditions.
Brent crude, a benchmark for more than half of the worlds oil, has plunged more than 20 percent since peaking in June at about $115 a barrel as supply, boosted by U.S. shale production, outpaces demand. Brent traded today near $87 a barrel. Iran needs to achieve a break-even sales price of $143 a barrel this year to maintain its fiscal balance, according to data compiled by Bloomberg.
The government probably will face a budget deficit; thats why growth will be the victim, Kevan Harris, associate director at Princeton Universitys Center for Iran and Persian Gulf Studies in Princeton, New Jersey, said by phone today.
Iranian oil exports fell to the lowest level on record in August, according to information reported on Oct. 21 by the Joint Organisations Data Initiative. Economic growth and energy demand is slowing in China, Irans biggest buyer, while the Persian Gulf states sales are restricted by U.S. and European Union sanctions.
Iran dropped in 2012 from a rank of second to fifth in production among the 12 members of the Organization of Petroleum Exporting Countries. It pumped 2.78 million barrels a day in September, data compiled by Bloomberg show. The nation holds oil reserves of 157 billion barrels and the worlds biggest deposits of natural gas, estimated at 1,192 trillion cubic feet, according to BP Plc. (BP/)
The U.S. and allied countries have imposed sanctions on Iran over concerns that its nuclear program could mask efforts to produce a bomb, while Iran says its atomic work is for peaceful purposes. The sanctions have almost closed Irans oil and gas fields to investment over the last decade, limiting the countrys access to technology to boost output and build plants for exporting liquefied natural gas.
The decline in crude prices and a looming Nov. 24 deadline for a nuclear accord with the U.S. and other world powers are raising pressure on Rouhani, elected last year on a platform to end Irans isolation and revive the economy.
In the issue of oil, the economy has not been the sole important factor, Rouhani said. International politics and plots have also affected prices, he said, without elaborating.
Irans inflation rate has slowed to 15 percent from a peak of 32 percent two years ago, according to the Central Bank of Iran. Irans $400 billion economy shrank more than 7 percent over the past two years, according to the International Monetary Fund, as sanctions depressed oil output to the lowest since 1990 and deterred investment. Growth will probably resume this year, the IMF says.
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Iran Oil Revenue Shrinks by 30% on Price Decline, Rouhani Says