AFP: Iran's central bank warned on Monday that if oil prices fall under 60 dollars a barrel, the country's oil-dependent economy will struggle to survive the world financial crisis, the ISNA news agency reported.
TEHRAN, November 3, 2008 (AFP) – Iran's central bank warned on Monday that if oil prices fall under 60 dollars a barrel, the country's oil-dependent economy will struggle to survive the world financial crisis, the ISNA news agency reported.
"If average price of oil stays at 60.6 dollars in the remaining five months of the current year (to March 2009), we can get through this crisis safe and sound," the bank's deputy for economic affairs, Ramin Pashaifam, was quoted as saying.
"If the price falls under this, our economy will face big problems."
Oil prices surged to record highs in July of close to 150 dollars a barrel but have since plunged, with OPEC's basket price standing at 57.65 dollars on Friday, despite the cartel deciding to cut its output.
Crude income accounts for 80 percent of foreign earnings for Iran, OPEC's second largest exporter, making the economy highly vulnerable to oil price shifts.
Pashaifam said that with a minimum price of 60 dollars, Iran will still need to use savings from oil revenues to cover its budget needs.
"In a case of 60 dollars per barrel for oil, no cash will remain in the Oil Stabilisation Fund," he said, referring to a fund which aims to guard against price fluctuations and to finance private sector projects.
Economy Minister Shamseddin Hosseini said on Monday that the fund now contained 25 billion dollars.
Analysts say Iran needs a price of around 80 dollars to survive inflation and a global economic downturn.