Iranian Oil Minister Bijan Zangeneh said Monday the budget for the country’s energy sector was on a steady path toward “nil.”
The minister addressed lawmakers Monday to discuss budgetary strains resulting in part from a weak crude oil market. Already, the Iranian oil sector saw investments fall from $21 billion in 2012 to $17 billion in 2013.
“With this trend, investment from our own resources will be nil next year,” he said.
The budget for the current Iranian year, which ends mid-March, relies on oil for 39.3 percent of government revenues. Drafts for next year call for a 6 percent decline in oil dependency.
The oil minister said lawmakers are preparing for oil priced at around $40 per barrel. When oil was around $100 per barrel, the oil ministry’s share of the budget was $13 billion, but the slump could mean a 75 percent decline.
“The petroleum industry needs financial resources,” he said. “How can we run the petroleum industry with this [meager] money?”
The Iranian government said that, since late 2013, oil exports have declined by about 1.5 million barrels per day, taking about $100 billion from the revenue stream. Iranian exports were curbed according to a late 2013 nuclear agreement with world powers.
Though the Iranian and U.S. governments have declined to confirm their existence, a thaw may be developing between the historic adversaries in the way of letters allegedly exchanged between President Barack Obama and Iranian Supreme Leader Ali Khamenei.
Western economic sanctions on Iran’s energy sector are already impacting the health of the Iranian economy. For fiscal year 2013-14, the World Bank estimates the Iranian economy contracted at an annual rate of 1.7 percent.
Iranian President Hassan Rouhani last year described the drop in crude oil prices as a plot against his country.
