Normal Int'l Ties Key to Improving Oil Sector

EghtesadsOnline: Selling one million barrels of oil a day as forecast in the March 2019-20 budget bill is wishful thinking in the absence of robust diplomatic relations with neighbors and the world, a member of the Majlis Energy Commission said.

News ID: ۷۴۹۲۴۵

21 December 2019

“There is a direct link between crude oil sales and the quality of relations with the outside world,” Hedayatollah Khademi was quoted as saying by ISNA.

Iran's oil industry can do better in attracting foreign direct investment and sell crude oil on the condition that it normalizes its relations with the world, he stressed.

The government expects to earn $11 billion from selling one million barrels of oil a day. Citing government forecasts, $10.5 billion from oil revenues would go for importing essential goods at the subsidized rate of 42,000 rials to a dollar, Financial Tribune reported.

Current estimates of Iran’s oil exports are between 100,000-300,000 barrels per day, compared to a pre-sanction high of 2.5 million barrels per day.

On December 16, First Vice President Es'haq Jahangiri said oil exports have hugely declined due to the US economic sanctions but did not disclose export numbers.

Jahangiri said that even India is now refusing to buy Iran’s oil fearing Washington’s wrath.

In the next fiscal year general revenues have been projected at 4,845 trillion rials ($37 billion as per the open market rate of USD 1= 13,000 rilas).

Energy experts like Mehdi Asali, a former director for OPEC affairs, say so long as constraints on financial transactions exist the industry can neither have access to modern technology nor be rehabilitated.

According to the International Monetary Fund, Iran’s economy is expected to shrink by 9.5% this year, down from a previous estimate of a 6% -- as the country feels the impact of tighter US economic and banking sanctions.

The IMF forecasts, published in August in the fund’s World Economic Outlook report, are not far from estimates given by the World Bank, which said Iran’s economy by the end of 2019-20 would be 90% of what it was two years ago.