Domestic Economy

Plans in Place to Cushion Effects of Low Oil Prices

Plans in Place to Cushion Effects of Low Oil Prices
Plans in Place to Cushion Effects of Low Oil Prices

President Hassan Rouhani's chief of staff, Mohammad Nahavandian, on Monday said the share of oil revenues in the next fiscal budget is defined in such way to ensure that the economy is least affected by the oil market fluctuations.

"The challenges posed by further drops in international oil prices for Iran's economy will only be short-lived, whereas the countries that have plotted the slide in oil prices in the first place will receive a more severe blow," he was quoted by IRNA as saying.

He was echoing similar remarks made by other Iranian officials that the oil price fluctuation is a conspiracy orchestrated by the countries in the region and beyond to force Iran to compromise on its nuclear energy program. 

Talks are currently underway between Iran and the world’s six major powers to reach a settlement to end a decade-long standoff over Tehran’s nuclear activity.

Iranian officials are optimistic that the ongoing talks with the West will result in the lifting of sanctions that have muzzled Iran’s economy for years, leaving it grapple with recession, unemployment and massive inflation rates.

In a bid to avoid any possible budget deficit, the Rouhani administration has based next year’s (stating March 21) budget on an oil price of $72 per barrel, $30 less than what was predicted in the current budget.

Oil revenues account for less than a third of next year’s budget, the lowest share in the past ten years.

Noting that many countries have taken notice of the investment opportunities in Iran, Nahavandian underlined that Iran’s participation in the global markets will “not only transform the regional as well as global economies; it will also significantly improve the global energy security.”

He further noted that “sustainable economic growth is not attainable as long as the economy is dependent on oil and gas resources.”

  Tackling Further oil Price Slump

Meanwhile, Minister of Economic Affairs and Finance, Ali Tayebnia, says: “Iran can handle a further slide in oil price to $25 a barrel.”

“The government will manage the country’s affairs even if the oil price drops further to $25 a barrel; just as the lower-than-expected revenues in the current year did not pose any serious problem,” he was quoted by ISNA as saying.

His remarks eco the position of Oil Minister Bijan Namdar Zangeneh, who earlier said “even if the oil price goes down to $25 a barrel, the oil industry will not be threatened.”

Zanganeh made the remarks after the Organization of the Petroleum Exporting Countries (OPEC) members refused to cut oil productions in favor of propping up the oil price.

“Iran has no plan (to hold an emergency OPEC meeting) and is currently consulting with other OPEC members to help prevent further falls in prices, but these consultations have yet to bear fruit,” he said.