Iran’s oil plunges below $30

Iran’s media reported on Saturday that the price of the country’s heavy crude oil had plunged to below $30 per barrel for the first time in almost 20 years.  

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. 

The price had been registered 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. 

Iran last saw record low prices in 1998 when its oil was traded in markets at below $10 per barrel. 

Officials in Tehran had earlier said they expected the prices 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.   

Petrodollars provide the lifeline of the Iranian economy and officials have already emphasized that oil production as well as oil exports will increase even in face of falling prices. 

“Considering that the costs for the production of oil in Iran are low, further drops in oil prices will not undermine Iran’s oil export plans,” said Rokneddin Javadi, the managing director of the National Iranian Oil Company (NIOC). 

Javadi emphasized that Iran is still eager to regain the oil market share it has lost as a result of the US-engineered sanctions against the country.

Nevertheless, he warned that OPEC’s failure to devise an appropriate policy to accommodate the incoming Iranian oil supplies will push the prices to even lower levels. 

“OPEC member states should keep their output within the quotas that have already been defined,” said Javadi. 

“We are ready to increase Iran’s total oil production by 500,000 barrels per day within a week after the removal of the sanctions,” he has been quoted as saying by IRNA news agency.

Iran’s oil production, the official added, will rise to above 2 million bpd in less than six months afterwards.

Elsewhere in his remarks, Javadi said fresh supplies of oil to international markets will mostly hurt producers whose production costs are high. 

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