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Iran will face no problem even with $25 oil: finance minister

Iran will face no problem even with $25 oil: finance minister

Iranian Finance and Economic Affairs Minister Ali Tayyebnia says the administration will face no problem even if oil price drops to $25 a barrel.

“For the time being, predicting oil price fluctuations is not possible. So, the administration is preparing itself to deal with any probable situation,” the ISNA news agency quoted Tayyebnia as saying.

Some international organizations predict that oil price may plunge to $40 per barrel and some others predict that it may rise again to $70, he added.

However, even if oil price drops to $25, the administration will be able to run current affairs and implement development projects, he stressed.

On January 18, Tayyebnia announced that Iran foresees three scenarios for finalizing the next year’s national budget (March 2015-March 2016) based on oil prices of $40, $50, and $70 per barrel.

Three pessimistic, middling, and optimistic scenarios have been foreseen by the administration, he said, adding that one of the scenarios will be finalized.

Oil prices have fallen 60 percent from their June 2014 peaks, driven down by rising production, particularly of U.S. shale oil, and weaker-than-expected demand in Europe and Asia.

Iran faces international sanctions on its energy industry over its nuclear program, with the European Union banning imports of crude from the country.

On December 7, President Hassan Rouhani presented the 8.379-quadrillion-rial (about $250 billion) national budget bill for the calendar year 1394 (March 2015-March 2016) to the parliament.

The bill has been drafted based on an average oil price of $72 per barrel with an average exchange rate of 28,500 rials to the U.S. dollar for the fiscal year.

Rouhani has acknowledged that the national budget would be under pressure given the big fall in oil prices in recent months.

“Such a drop is unprecedented,” he said. “In the short term, we will have a decrease in our revenues. Our economy must move toward non-oil exports. The decline in the price of oil provides a new opportunity to accelerate this.”