Iranian concerns rise over falling oil prices

TEHRAN, Iran – Iranian officials are expressing new worry over the global oil price slump, which is threatening the country’s budget and could undermine its strategy in international nuclear negotiations.

As recently as Tuesday, Iran’s oil ministry was speaking confidently despite the 20 percent global price decline, insisting that it wouldn’t affect the budget. Deputy Oil Minister Rokneddin Javadi said the decrease would be “short-lived,” an oil ministry information service said.

But Iranian President Hassan Rouhani, clearly concerned, has directed the oil ministry to seek a meeting of the Organization of the Petroleum Exporting Countries cartel next month to discuss holding up the price, Iranian news agencies are reporting.

Crude oil has fallen from more than $100 a barrel in spring to less than $85 a barrel. About 75 percent of Iran’s government revenue comes from oil sales. Analysts say the country needs an oil price of about $140 a barrel to sustain its budget.

Iranian Vice President Mohammad Nobakht, acting on Rouhani’s instructions, told Oil Minister Bijan Zanganeh to seek the OPEC meeting, Iranian news agencies reported.

Rashed Abbasi, head of a study group associated with the oil ministry, is predicting that prices could fall to less than $60 a barrel within a year. Bayazid Mardokhi, an economist associated with Iran’s reformist camp, said a continuing price slump would force the government to cut its overall budget or reduce planned civil engineering projects.

Oil analysts say it is uncertain how long the decline in prices will last. It has been driven by a slowdown in the economies of China and Europe, coupled with strong supply from the United States and some Middle Eastern countries.

It is not certain that OPEC would agree to bolster prices. The group, which still accounts for about 40 percent of global oil supply, is divided. Saudi Arabia, Iran’s regional rival, apparently is willing to have oil prices fall.