TEHRAN: The Iranian administration is planning to lower the crude oil price for the next year’s budget (March 2015-March 2016) to $40, Finance and Economic Affairs Minister Ali Tayyebnia said here the other day.
The government is revising its draft budget to assume a base price of $40, from $72 a barrel, Tayyebnia added.
Oil prices have fallen 60 percent from their June 2014 peaks, driven down by rising production, particularly of U.S. shale oil, and weaker-than-expected demand in Europe and Asia.
Iran faces international sanctions on its energy industry over its nuclear program, with the European Union banning imports of crude from the country.
On December 7, Iranian President Hassan Rouhani presented the 8.379-quadrillion-rial (about $250 billion) national budget bill for Iranian calendar year 1394 (March 2015-March 2016) to the parliament.
The bill has been drafted based on an average oil price of $72 per barrel with an average exchange rate of 28,500 rials to the U.S. dollar for the fiscal year.
Rouhani has acknowledged that the national budget would be under pressure given the big fall in oil prices in recent months.
“Such a drop is unprecedented,” he said, adding, “In the short term, we will have a decrease in our revenues. Our economy must move toward non-oil exports. The decline in the price of oil provides a new opportunity to accelerate this.”
