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Tuesday, November 4th 2008, 1:07pm

Oil prices above $60.. Iran's necessity ?

Iranian news agency ISNA reports that Iran could be facing problems with the economy if the oil prices fail to average around $60 a barrel, until March, end of the current year for Iran.

While the International Monetary fund and some economists have earlier said that Iran needs Oil at around $70 to $75 to balance its books,
Ramin Pashaei, the deputy central bank governor for economic affairs, said that if the oil remains at an average price of $60.60 for the next 5 months of the year, Iran can pass the crisis soundly.

Though Pashaei has not mentioned the problems that may crop up, economists say that falling prices could take a toll on the government's spending and may also send the current account into deficit in the medium term.

Whilst on one hand we have consumers happy with the reduced oil prices, downslide of their economy seems to be a major problem for Oil exporting countries. So what is the most sustainable price for Oil ? or is this is just another example of the world's mantra.. some lose and some gain ?


Sunday, November 16th 2008, 3:38pm

Iran's action on oil prices

Apparently, Iran is persuading the OPEC hard to reduce the output.

When oil prices fell from US$147 a barrel earlier this year to a recent low of less that USD 60, inflation in Iran shot up to 30 percent, and the unemployment figures climbed to 11 percent. The International Monetary Fund estimates that, to keep its economy solvent, Iran needs US$75 a barrel for its oil.

The easiest economic theory goes as follows : Drop the supply, the prices will rise provided the demand remains, of course. From what happened last, the drop in output did nothing. The oil prices still fell.

But the economic theories are failing. There are too many negative parameters to account for in the supply-demand formula and analysing has become rather impossible.

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