MP Calls for Emergency OPEC Meeting

MP Calls for Emergency OPEC Meeting
MP Calls for Emergency OPEC Meeting

With oil prices falling, the projected oil sales in the national budget are not being met and Iran's returns on oil sales are declining, said a member of the Majlis energy committee, noting that an emergency OPEC meeting should be convened to address this.

An emergency OPEC meeting towards cutting the production rate of members' should prevent oil prices from slumping further, Masoud Mir-Kazemi, former oil minister, was quoted by Fars news agency as saying. The budget projection for oil exports is a total of 1.4 million barrels per day, but the five-month report submitted to parliament by the oil ministry indicates that the forecasted amount has not been met, and the volume of exported oil and condensate is below the stipulated amount.

Meanwhile, the reports received by parliament suggest that the amount of oil revenues blocked in other countries has not reduced, despite ongoing Geneva negotiations; it has even increased in some countries. This will put pressure on the government to obtain the required budget.  

There is a growing concern from parliament that pressure on the country's monetary base may grow, and liquidity may increase, added to the fact that the government has to provide for its own expenses every month.  Cuts in oil revenues caused either from export reduction, declining oil prices or an increase in the percentage of blocked oil revenues, together with the Central Bank's obligation to deliver rials to the treasury's account, all intensify concerns over the increased monetary base, which ultimately means that the government cannot realize its objective to reduce inflation.

"The oil minister requested an emergency meeting a while ago and now there is no reason to wait for the 27 November scheduled meeting," Mir-kazemi said asserting that a prompt response is needed to circumnavigate further problems.

The continuing slump in global oil prices is punching holes in the budgets of OPEC member countries, with "Iran having the biggest budget hurdle among other producers," according to Kazemi. The P5+1 group and Iran struck an interim deal on Tehran’s nuclear program during the talks in Geneva last November, according to which Tehran was allowed access to $4.2 billion in funds frozen as part of the financial sanctions imposed on the country. The negotiations are ongoing to reach a comprehensive and final nuclear agreement, with a deadline of 24 November 2014.