Iran needs to lower oil price in next year’s budget

Business Materials 17 December 2014 15:25 (UTC +04:00)

Tehran, Iran, Dec. 17

By Milad Fashtami - Trend:

Iranian MP, member of the Energy Commission of Iran's Parliament (Majlis) Robert Biglerian believes that Iran needs to lower down the price of oil in the next year's budget plan in order to avoid budget deficit.

"Considering the falling tendencies in oil prices, the best price may be around $60 per barrel of oil," Biglerian told Trend Dec. 17.

Falling global oil prices forced Iran's government to decrease the oil price figure in next year's budget bill from current $100 per barrel to $72 per barrel. According to Bloomberg, Futures fell as much as 2.4 percent after sliding below $54 a barrel on Dec. 16 for the first time since May 2009.

Iran is expected to face a budget deficit in the current Iranian calendar year (to end March 20, 2015), due to the sharp fall in oil prices.

Biglerian previously said that the government may use National Development Fund (NDF) to compensate for the current year's budget deficit.

"The government can use the NDF funds to invest in the country's infrastructure development plans and even pay the current expenses," he said.

Iran's current year budget envisages the price of $100 per barrel of oil.

Based on Iran's budget law, the country is supposed to export 1.4 million barrels of oil (including gas condensate) per day.

Reports suggest that if the current tendency continues, the total budget deficit may soar above $2.5 billion.

Iran's President Hassan Rouhani has previously predicted that the country's oil revenues will be 30 percent less than expected.

It should also be noted that Iran decided to sell its crude oil to Asia in November at the biggest discount in almost six years. The decision was made after Saudi Arabia cut prices for all grades and to all regions for November. Qatar and Iraq decreased their prices as well.