Azernews.Az

By Sara Rajabova

Many believe that the recent sharp drop in the oil prices has created a great economic hardship for the world’s major oil-producing nations, including Iran.

The Iranian government still remains dependant on oil revenues, which were lessened by half after the western sanctions imposed on the country’s economy over its nuclear energy program. Now the sharp fall in oil prices is expected to further deteriorate Iran’s economy that is already experiencing hard times because of the sanctions.

A while ago, Iran’s President Hassan Rouhani said the country’s oil revenues have plunged by 30 percent due to a recent fall in crude prices in the global market.

He said that the oil-rich country should brace itself for “the new conditions.”

However, taking into account this fact that the country could survive the times of hard economic situation during the years of restrictions and limitations, one can come to this conclusion that Iran wouldn’t be seriously affected by the low oil prices.

Iranian administration’s Spokesman, Mohammad-Baqer Nobakht has recently said the country will make economic plans according to the new oil prices to avoid potential economic setbacks.

Nobakht explained that Iran had based its budget for the current Iranian year (started March 21) on assumptions that the price for each barrel of oil would be 100 dollars.

“We will compensate for this discrepancy through a mechanism of balancing expenditures in accordance with revenues,” he said.

“A budget deficit is brought about when, regardless of falls in revenues, we continue spending on the same track as before; but, we pursue a planned structure of expenditures; therefore, we will face no setbacks,” said Nobakht, who is also Iran’s vice president for strategic planning and supervision.

Brent crude, a benchmark for more than half of the world’s oil, has fallen more than 20 percent since June, when its price had reached about $ 115 a barrel.

Earlier, Nobakht blamed the West and some Arab countries of manipulating oil prices to worsen Iran’s economy and undermine its negotiating position.

“Some so-called Islamic countries in the region are serving the interests of America and other arrogant powers in trying to squeeze Iran. They [the West] have forced our oil production from four million bpd to one million bpd, and this recent fall of oil prices is their latest gimmick,” semi-official Mehr News quoted Nobakht as saying in late October.

Meanwhile, an expert on energy issues considered that while Iranian oil and gas industry has been facing low investment for the last three decades, the current price lowering will not have any serious impact on the issue.

Speaking on low oil prices impact on Iranian economy, Hooman Peimani, a research fellow at the Asia Pacific Energy Research Center told Trend Agency that if oil prices remain within an 80-dollar range, Iran's oil revenue will decrease to leave less money for the Iranian upstream and downstream projects.

He said however low investment has been a feature of the Iranian oil and gas industry over the last three decades as the bulk of the oil generated revenue has funded the Iranian budget.

Peimani also said the lowering of oil prices will not last for a long time. “Oil consumption will likely increase in the coming winter to increase the global demand for oil and push up prices.”

Despite the positive prediction of the experts, the global crude oil prices continue to swiftly fall on the world markets. If the prices continue to fall in this tempo in 2015 too, then it will create great problems for the energy producing countries, as well as Iran.