Iran expects oil to fall below $30

Iran said on Saturday that it expects oil prices to plunge further below $30 per barrel, acknowledging that this could have serious impacts on its economy.

“Oil producing countries will suffer serious blows under the current conditions and with [further] plunges in prices of this product (oil),” said Iran’s First Vice President Es’haq Jahangiri.

For a country that has devised its budget based on $100 for each barrel it expects to sell, it will be hard to change the calculations to $30 per barrel, Jahangiri added.

On Friday, the US benchmark West Texas Intermediate for January delivery dropped 22 cents to $34.73 a barrel on the New York Mercantile Exchange, a fresh low since February 2009.

In London, Brent North Sea crude for delivery in February fell 18 cents to $36.88 a barrel.

“It was not expected in Iran … for oil to fall below $60 per barrel,” he said. “Speculations show that oil will fall further to below $30 per barrel.”

Jahangiri added that Iran’s economy made a satisfactory progress over the past Iranian calendar year of 1393 (March 2014-2015). He added that more progress is expected to be achieved before the end of the current year (21 March 2016).

Iranian officials had previously announced that the country would devise the budget for the next calendar year (March 2016-2017) by considering the average price for each barrel of oil it would sell throughout the year at $42 to $50.

“In consultation with the Oil Ministry, three price options of $42, $45 and $50 were discussed which are expected to earn [about $22.5 billion],” Reuters has quoted Mohammad Baqer Nobakht as saying in September.

Oil revenues provide the lifeline of the Iranian economy and officials have already acknowledged that falling prices have severely undermined the country’s economic performance.

Iran’s President Hassan Rouhani said earlier that certain major oil producers collaborated with world powers to put Iran and Russia under pressure by taking measures to bring down the prices of oil.

“During the days [that Iran was under the pressure of the sanctions], some big producers of oil that are dependent on world powers decided to reduce the price of oil from $110 per barrel to $40 per barrel to undermine Iran and recently even Russia,” Rouhani was quoted by the media as saying.

The president did not name any country but chances are that he was referring to Saudi Arabia which is largely blamed for the free-fall of oil prices over the past year.

During a crucial OPEC meeting last November, Saudi Arabia pushed the Organization to maintain its production despite calls by Iran and others to reduce output and help boost prices.

This led to further plunges in prices that had almost halved from highs of above $110 per barrel within only a few months.

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