The price of U.S. crude has slumped below $75 a barrel, a four year low. While that’s good news for drivers, it’s not so good for oil-exporting nations such as Iran. The country is already exporting lower levels of oil due to international sanctions. CCTV America’s Nathan King reported the story from Washington D.C.
A few months ago, Iran’s economy was improving. Inflation was down, sanctions relief under an interim nuclear accord, which brought billions back into the country.
But with oil prices in continued free fall, Iran’s weak economic recovery is in danger. Like Russia, Venezuela, and other oil producers, Iran needs higher oil prices just to break even.
While Gulf states like Qatar can tolerate oil prices around $50 a barrel, and Saudi Arabia somewhere north of $90. Iran needs the price of crude to be much higher.
“I think for them to have budget they like, they need about $125 a barrel. And my understanding is for their next budget, they are calculating $70 a barrel. So they are going to have the cut back on a number of things with economy that’s really in a pretty bad shape,” said Robert A. Manning, resident senior fellow at Atlantic Council.
Prices would climb if Organization of the Petroleum Exporting Countries, or OPEC, members cut production, especially Saudi Arabia, the world’s second largest oil producer. Without naming names, some Iranian officials said regional rivals have conspired keep prices low, possibly to help the U.S. pressure Iran to sign a long-term deal over its disputed nuclear program.
Oil analysts said the Saudis are trying to make it more expensive for the U.S. to produce shale oil.
“Once oil prices get to be $80 or below, you start to see the profits from shale and the incentive from investment. So I think that was a secondary incentive for Saudis to slow down the shale revolution,” Manning said.
Whatever the motives, Iran is feeling the pinch as the deadline to sign a nuclear deal approaches on Nov. 24th.
Lower oil prices affect Iran's economyOil prices continue to fall. The price of U.S. crude has slumped below $75 a barrel, a four year low. While that’s good news for drivers, it’s not so good for oil-exporting nations such as Iran. The country is already exporting lower levels of oil due to international sanctions. CCTV America’s Nathan King reported the story from Washington D.C.
Trita Parsi of Nat’l Iranian American Council discusses oil prices
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