Is Iran ready for $70-barrel crude oil?

Is Iran ready for $70-barrel crude oil?

By Dalga Khatinoglu

OPEC oil basket price slipped to $80.64 per barrel on Nov.3 from a mid-June figure of about $108.

Iran hasn't announced officially any figure for its crude oil price, but Mehr News Agency reported in late October that Iran set its oil price at $86, as opposed to an average of $104 per barrel over the past seven months.

The Middle East country's yearly budget was based on $100 per barrel oil. Iran reportedly offers discounts as well as free shipping services for his customers to help restore the huge drop in oil export levels started in 2012 due to Western sanctions.

Iran's crude oil export went from 2.5 million barrels per day (mbpd) in late 2011 to 1.07m bpd in late 2013. After sanctions eased due to the interim nuclear accord obtained on November 24, 2013, Iran's crude oil increased, mostly because of soaring the natural gas condensate exports.

However, according to the Custom Administration's latest report published on Nov.3, Iran exported a barrel of gas condensate at about $76 per a barrel, while these figures for September, August and July were about $107.6, $101 and $84. The last month's figure clearly is significantly below the global natural gas condensate price.

Iran, of course increased its condensate export volume to 435,757 bpd in first 9 months of 2014 from about 170,000 bpd in the same time during last year, but it's crude export have not undergone what was recognized in the budget bill.

According to the budget bill, Iran should export 1.3 mbpd of crude oil (including condensates) at $100 per a barrel. However according to Reuters' calculations, Iran's crude oil export to Asian markets was about 1.14 mbpd in the January-September period. Iran sells oil to Turkey as well, but it doesn't seem that the total oil export of Iran during the current year could outpace 1.3 mbpd.

Cheap oil not only affects Iran's revenues, but also has a double impact on Iran's economy because the budget law is written based on Iran's fiscal year, which starts on March 21. Based on the budget, Iran needs to take measures to withstand cheap oil prices for another five months until approval of a new yearly budget. Iran also can review its new budget bill, but the deputy head of Parliament's energy commission, Mohammad Saeed Ansari told Trend on Oct.29 that the government hasn't requested any review over the current budget bill yet.

Petchem sector

Iran can boost its petrochemical products export to compensate for the drop in crude oil revenues because the petrochemical products export shares about 28 percent of its non-oil exports (including gas condensate). Iran exported about $7.6 billion worth petrochemical products during the last seven months, indicating an 18 percent increase compared to the same period in last year. But regarding this fact the Iran's gas consumptions tripled during last week and it's expected to reach from the current 350 million cubic meters per day (mcmpd) to 450 mcmpd in winter. It is impossible for Iran to supply more gas to petrochemical plants in the coming months due to long-term gas shortages in the cold seasons, despite the surplus capacity in petrochemical units.

National Iranian Petrochemical Company's Managing Director Abbas Sheri Moqaddam said on Oct.28 that the country's annual petrochemical production capacity is 60 million tons, but the current production is about 40 million tons.

Tax revenues

Iran's tax revenues stood at 330 trillion rials (some $10 billion) during the first seven months of the current Iranian year, starting from March 21, head of Iran's tax organization, Ali Askari said in late October.

However, according to budget bill, it was expected that the country's tax revenues reach $20 during the current fiscal year, so Iran's tax revenues haven't been realized.

Production sector

It seems the country exited from economic stagnation, despite about 9 percent economic contractions during the last two years. According to Iran's government, the GDP growth in spring was about 4.6 percent totally, while in the industrial sector this figure reached 10 percent. Iran can boost financing the industrial sector, including the auto sector, steel and cement production. However, Iran's total non-oil export increased by 19 percent during last seven months, while the share on commodities excepting the gas condensate and petrochemical products in this growth is only 2.5 percent.

It seems the only way in front of Iran is to economize in allocation budgets in some sectors, such as construction.

Iran also can use funds stored in national monetary funds like the National Development Fund. Iran has deposited 29 percent of oil revenues to this fund during the current year and before that, the fund's assets were about $54 billion. The Iranian government can get help from this fund's reserves to pass this sensitive stage.

Dalga Khatinoglu is a specialist on Iran's energy sector and head of Trend Agency's Iran News Service

Subscribe to Trend in Google News! Subscribe
Oil production in Azerbaijan to moderately rebound - S&P
Oil production in Azerbaijan to moderately rebound - S&P
Turkmenistan lays out plans for hydrogen energy development
Turkmenistan lays out plans for hydrogen energy development
Iran, Azerbaijan continue construction of Khudafarin and Giz Galasi hydro junctions (PHOTO)
Iran, Azerbaijan continue construction of Khudafarin and Giz Galasi hydro junctions (PHOTO)
Loading Bars
Oil production in Azerbaijan to moderately rebound - S&P
Georgia discloses its main cement sources of import
Turkmenistan lays out plans for hydrogen energy development
US lawmakers seek litigation at WTO against India on wheat subsidy
Iran, Azerbaijan continue construction of Khudafarin and Giz Galasi hydro junctions (PHOTO)
Climate policy of Uzbekistan: Implementation of measures to prevent climate change and adaptation in most vulnerable sectors of economy
S&P Global Ratings approves Azerbaijan's credit rating at 'BB+/B'
UK Foreign Secretary to meet with Lavrov in Moscow in February
Netaji’s statue at India Gate to be 25 feet high: NMAG director
India to allow arms manufacturers to enhance production
Kazakhstan names Samruk-Kazyna's entreprises planned to be put up for IPOs
Iranian currency rates for January 22
Statistical center of Iran reveals figures of growing inflation
Azerbaijan reduces quarantine period for COVID-19 patients
Kazakh Gas Processing Plant opens tender on manufacturing of parts for pumping equipment
Azerbaijan's Kalbajar - most suitable for winter tourism among liberated areas, agency says
EAM Jaishankar dials envoys in US, Canada after 4 Indians freeze to death along US-Canada border
Balkan Shipbuilding Yard in Turkmenistan to build new ships
Uzbekistan shares domestic COVID-19 data for Jan.21
Azerbaijani oil prices decline
Azerbaijan talks probability of commercial oil & gas reserves at Aypara area in Caspian Sea
GM sets $6.5 bln for in Michigan electric vehicle plants -document
Georgia – Turkey trade turnover up
Subhas Chandra Bose's family members welcome PM's decision on Netaji's statue at India Gate
Kazakhstan talks business support measures related to tax legislation
Iran resumes gas export to Turkey
Central Bank of Azerbaijan fully meets demand at foreign exchange auction
US commits to helping Saudi Arabia, Gulf partners defend against threats from Yemen
NYPD officer killed, another seriously wounded in shooting
Poland, Georgia to hold Joint Intergovernmental Commission meeting – ministry
Saudi-led coalition denies targeting detention centre in Yemen's Saada
Arnold Schwarzenegger involved in car accident
Germany's minimum wage hike will not cost jobs - labour minister
Canadian tourist killed, 2 others wounded in Mexico resort shooting
Iran says gas flows to Turkey resume after being cut due to technical fault
Student shot at Maryland school, suspect in custody
France: Former aides to ex-president Nicolas Sarkozy jailed for opinion poll fraud
WHO recommends reduced dose Pfizer COVID vaccine for under 12s
Islamic State jailbreak in Syria, army barracks attack in Iraq leave at least 39 dead
U.N. chief condemns deadly Saudi-led coalition strike in Yemen
Amirabdollahian: new chapter in Iran-Russia ties to unfold
Trade turnover between Uzbekistan and Azerbaijan increases
Dozens killed in Saudi-led coalition air raid on Yemen prison
Price of fuel and lubricants in Kyrgyzstan increased by 70% over past year
Airbus cancels Qatar Airways order in escalating dispute
Turkey wraps up in-person semester with success against pandemic
Azerbaijan may toughen punishment for domestic violence
Azerbaijani Xalq Bank's profits increase
Azerbaijan names most profitable non-oil fields in terms of tax revenue growth
Kazakh oil and gas company to purchase variable speed drives
Кazakh Electricity Grid Operating Company opens tender to buy hydraulic press
Turkmenistan-Belarus trade turnover fell in 11M2021
Crime rate in Azerbaijani Armed Forces decreases - military prosecutor general
Size of consumer market in Azerbaijan increases - minister
Price indexes of financial, trade sectors at Uzbek stock exchange rise
Government focuses on subsidizing production rather than import – Azerbaijani Cabinet of Ministers
Azerbaijan is one of countries with best conditions for training - Australian gymnast
Azerbaijan's parliament discusses lifting of visa regime with Serbia
European Azerbaijan School hosts return of World Scholar's Cup to Baku (PHOTO)
Uzbekistan and Oman eye joint projects in transport sector
Schlumberger's profit jumps as higher oil prices spur drilling demand
Kazakhstan to strictly fulfill all investment obligations - President Tokayev
Global inflation crisis intensifying: what will Azerbaijan do?
Kazakhstan needs new tax policy - president
Georgia’s main oil exporters disclosed
Uzbekistan discloses level of assimilation of investment in fixed capital
Kazakhstan’s banking sector sees increase in total assets
Uzbekistan sees increase in volume of foreign trade turnover for 2021
Turkmenistan-Uzbekistan trade turnover increased in 2021
Iran eyes establishment of joint bank with China
Azerbaijan continues searching for servicemen gone missing during Karabakh war
UAE bourses end higher on financial, telecom boost
Kazakhstan's president orders to audit all local deposits
Turkmenhimiya opens tender to purchase chemical products
Azerbaijan shares data on number of vaccinated citizens
Azerbaijan confirms 1,068 more COVID-19 cases, 551 recoveries
German health min sees possible tripling of COVID infections by mid-Feb
Kazakh government must develop new modern approaches to public-private partnership - president
Kazakhstan unveils its TOP-3 trade partners for 11M2021
Azerbaijan launches working group to prepare measures to combat inflation
Israel's defence chief isolates at home after positive COVID test
Former ambassador sentenced to 10 years in prison in Azerbaijan
Azerbaijani holding training session for reservists (PHOTO/VIDEO)
Rising influence of limited elite groups in Kazakhstan becomes serious security threat - Tokayev
Turkmen factory discloses construction materials production data
Azerbaijan enters new stage of strategic development - official
Georgia’s fuel prices remain relatively low
Kazakhstan to create secondary market for distressed asset purchase and sale
SOCAR Turkey eyes capacity expansion for STAR Refinery
Russia reports 49,513 daily COVID-19 cases, a new high since start of pandemic
SOCAR’s STAR Refinery expands its list of oil grades
Kazakhstan needs tough policy to demonopolize economy - president
Iran reduces electricity subsides for high consuming users
Azerbaijan unveils value added growth in non-oil industry in 2021
Georgia names main trading partners by export destinations in 2021
Azerbaijan discloses state budget expenditure growth in 2021
Turkmenistan-Turkey trade volume increased in 11M2021
Goals of Advisor to French President's Cabinet, EU Special Representative for S.Caucasus's visit to Azerbaijan named (Exclusive)
Azerbaijan-Armenia border demarcation is priority - Russian MFA
Greenhouse sector in Georgia may soon get needed backup from USAID, UNDP, ADB
All news