Kayode Sesan
President Hassan Rouhani has devised the annual budget for the next calendar year (21 March 2016-2017) by anticipating sales of oil at an average price of $35 per barrel, Iranian media reported on Sunday.
The base price for oil in the next year will be half of that for the present year (which ends on 21 March 2016) and a third of that for the last year (which ended on 21 March 2015).
According to reports, Mansour Moazzami, an advisor to Iran’s Oil Minister Bijan Zangeneh, has been quoted as saying that the overall oil sales for the next calendar year are expected to reach $22 billion.
Moazzami further emphasized that tax revenues are also expected to reach Rials 850 trillion ($28 billion) from March 2016 to March 2017.
He further added that the government will present the budget to the Parliament before next Thursday.
This comes as Iran’s media reported on Saturday that the price of the country’s heavy crude oil had plunged below $30 per barrel for the first time in almost 20 years in mid-December trade.
Shana news agency – affiliated to Iran’s Oil Ministry – said in a report that the country had sold heavy crude at $29.4 per barrel in the week ending 18 December.
The report added that Iran had also sold its light crude at $35.1 per barrel over the same period.
Both figures show major drops from normal levels of the previous months. The average price of Iran’s heavy oil stood at $48.6 since March, added Shana. The average price of the light oil stood at $50.6.
Heavy crude and extra heavy crude streams account for most of the country’s oil production, at approximately 45 percent.
Officials in Tehran had earlier said they expected the price of oil – which provides the lifeline of the Iranian economy – to plunge below $30 per barrel.
“Oil producing countries will suffer serious blows under the current conditions and with [further] plunges in prices of this product (oil),” said Iran’s First Vice President Es’haq Jahangiri on 19 December.
For a country that has devised its budget based on $100 for each barrel it expects to sell, it will be hard to change the calculations to $30 per barrel, Jahangiri added.
Nevertheless, the country’s Finance Minister Ali Tayyeb-Niya later emphasized that Iran had provided the required preparations to deal with the economic impacts of oil prices even as low as $30 per barrel.
Tayyeb-Niya said a large part of those preparations focuses on the implementation of a comprehensive national taxation program which is already on the agenda of the government.
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