Iran bracing for $30 oil

TEHRAN, Dec. 23 (UPI) -- Financial planners in Iran need to be prepared for crude oil prices moving potentially below $30 per barrel, the Iranian minister of the economy said.

Minister Ali Tayyebnia described the slump in crude oil prices as a fiscal act of war, but stressed the administration of President Hassan Rouhani has been able to control inflation and achieve positive economic growth.

"The inflation rate was lowering in Iran, but a [potential] oil price below $30 per barrel is an indication of an all-out war which requires the use of all the country's capacities to confront it," he was quoted by the Oil Ministry's news website SHANA as saying.

Iran has been at odds with Saudi Arabia, the de facto leader of the Organization of Petroleum Exporting Countries, over production levels. Tehran suggested rival members should make room for the eventual return of Iranian crude oil to an eventual post-sanctions market.

The minister said oil revenue for Iran is expected to drop from $120 billion recorded in 2011 to below $20 billion for the Iranian calendar year ending March 20. Nevertheless, Tayyebnia said the administration was taking steps to reduce the dependence on oil revenues.

A world market outlook from OPEC, published Thursday, said there is some upside potential for the Iranian economy over the medium-term. In its monthly market report for December, OPEC said Iranian crude oil production was around 2.8 million barrels per day, a 4.2 percent increase from 2013.

Sanctions pressure was tightened on Iran early this decade in response to the country's nuclear program. That pressure will ease as a result of a July agreement to curb nuclear activity reached between Iran, the five permanent members of the U.N. Security Council, plus Germany.

The International Monetary Fund said in a review of the Iranian economy that oil prices and postponed investment decisions have slowed economic growth for Iran. Real growth in gross domestic product is expected to decline from 3 percent to somewhere between 0.5 percent and -0.5 percent in the coming year.