Central Bank Wants Iran to Reduce Oil Dependency

A00268868.jpgTEHRAN (FNA)- The Central Bank of Iran called on Tehran to increase and diversify non-oil exports in a bid to ease the country’s reliance on oil revenues.

“Iran’s projected oil revenues will decrease by $54 billion if crude prices continue to fall,” CBI Governor Mahmoud Bahmani said on Saturday on the sidelines of a local banking summit.

The financial crisis gripping Wall Street has hit Europe and Asia; stock markets across the world have plunged since the beginning of the economic turmoil.

Although the current global economic crisis has not directly affected Iran, declining crude prices have been a cause for concern for the world’s fourth biggest crude producer as oil is the country’s prime export.

Analysts believe the lack of confidence in the market paints investors a gloomy picture of the future and forces crude oil to mirror the stock market trading levels. Oil prices have almost halved since reaching a record high of above $147 a barrel in July.

According to Bahmani, the only way for Iran to cope with the currently projected consequences of the global financial crisis is to increase non-oil exports and ban imports of luxury and non-essential goods.

There is also the possibility of decreasing world oil production to meet the current low demand. OPEC President Chakib Khelil said oil-producing nations will considerably cut their crude output at an emergency meeting in Vienna.

“There will be a reduction in production at the next extraordinary meeting of OPEC, and it will have to be a substantial one to get the balance right between supply and demand,” said Khelil on Saturday.

Many analysts are forecasting OPEC to slash output by at least 1mln barrels per day, although Olivier Jakob of oil market analysis group Petromatrix said a cut may be limited to 500,000 bpd.

OPEC will try to stabilize global crude oil prices at around $70 to $90 a barrel, analysts said.

Iran wants OPEC to cut output by 1mln to 3mln bpd because of the financial crisis and a drop in world oil demand, Iran’s OPEC Governor Mohammad Ali Khatibi said yesterday.

Pointing at various world financial crises and a drastic drop in world oil demand, he expressed hope that OPEC member states would reduce their output by 1 to 3mln bpd to establish balance between supply and demand.

Khatibi also later told Iran’s press tv that some OPEC ministers had said demand had decreased by 3mln bpd and others had called for a cut of at least 1m bpd, so “maybe between 1 and 3mln barrels per day there will be … discussion.”

Iranian Oil Minister Gholam Hossein Nozari has also renewed his call for OPEC to cut production, saying this was the only way to stop crude prices falling further.

Joining the group calling for a cut in production and a need to stabilize prices, was Qatar’s Oil Minister Abdullah Al Attiyah.

Al Attiyah said that oil prices at between $80 and $90 barrel would “be acceptable to consumers and producers at this time.

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