Iran’s President Concedes Oil Price Drop Hurting
President Ahmadinejad has publicly conceded that the continued drop in oil prices is hurting the economy. This admission comes at a difficult time–close to next year’s election, and when his approval ratings have already declined. Oil prices have plummeted and the effect this has had on Iran, whose main export is oil, is a serious matter. Outside economists have stated that Iran needs oil to sell at $90 a barrel in order to balance its current budget. Ahmadinejad stated that next year’s budget had been set expecting prices to be $50-60 a barrel, but due to the continued drop (now below $50 from a high of $147) the budget will have to be altered. A budget financed by oil at $30-35 a barrel will have to cut a significant proportion of state programs. The President had previously ignored the growing unemployment and inflation rates, lambasting the United States for “exporting financial problems to the rest of the world.” Although Ahmadinejad claims that he has no control over the global price of oil, his rivals are criticizing him for squandering the huge oil proceeds from the previously high prices; rather than using them to buffer the economy during tough times as these. Which programs will have to be cut has not been made clear, but it is believed that the President might seek to cease subsidies which keep the price of fuel low. Because Iran has no refineries of its own, it is forced to import $350 million worth of fuel per month. This action, however, is widely unpopular.
Bridget Russell
