Iran’s oil minister said the decline in oil price has impacted Iran, but there are some tools to minimize the damage.
Bijan Namdar Zanganeh told Trend on Nov.13 that a significant drop in global oil prices would impact Iran’s economy and upstream projects, but Iran could pass through this stage by taking counterbalancing measures.
Zanganeh, who arrived to Azerbaijan as part of Iranian delegation headed by President Hassan Rouhani on Wednsday, said that Iran will compensate for the effect of low oil revenues on upstream projects by issuing credits from the National Development Fund to the contractors which engaged in upstream projects.
Iran’s yearly budget is set based on oil price at $100 per a barrel, but according to OPEC’s official website, its oil basket price dropped to $76.96 on Nov.11 compared to $107.89 in mid-June.
The effect of dropping oil price is double on Iran because Iran’s fiscal year will end on March 20, 2014.
According to the yearly budget, Iranian government should deliver 29 percent of oil revenues to the National Development Fund of Iran (NDF) to be used as financial facilities in the private sector’s projects. According to estimations, Iran would face a $2 billion deficit in oil revenues to meet the considered figure in budget law.
The Fund’s assets were $64.4 billion until August, the chairman of the board of directors of the NDF Qasem Hosseini said.
Zanganeh says that Iran planned to pursue a contractionary monetary policy for next year and to implement some projects aimed to boost the projects’ efficiency rate, alongside increasing tax revenues to compensate for the low oil price’s affect on the economy.
OPEC members must take measures
Iranian Oil minister referred to OPEC’s upcoming meeting on Nov.27, saying that Iran will make information exchange with other 11 members to evaluate the situation to make decision how OPEC can stabilize oil prices.
“I think OPEC members are in a maturity level that can take important measure in sensitive situations in favor of members’ interests,” Iranian oil ministry news agency Shana on Oct.28 cited Mohsen Qamsari, director for international affairs at the National Iranian Oil Company, as saying.
An agreement to cut the oil production level was unlikely at OPEC’s Nov. 27 meeting.
Iranian government hasn’t asked OPEC to hold urgent meeting before Nov.27, which is scheduled as an ordinary meeting among the members, he added.
According to OPEC’s latest monthly report, published on Nov.13, the cartel members produced 30.253 million barrels of oil per day in October, 226,400 barrels less than the previous month.
