• Tuesday, July 16, 2024
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BusinessDay

Iran, Venezuela vow to ‘neutralise’ oil price problem

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Hassan Rouhani, Iran’s President, flanked by Venezuelan counterpart Nicolas Maduro has vowed to “neutralise” the threat posed to both countries by plummeting oil prices, in a barely veiled broadside at Saudi Arabia.

OPEC members Iran and Venezuela are reeling from a slide in the cost of crude to around $50 per barrel from $100 just six months ago, a precipitous fall that is straining their budgets.

Losses accelerated after OPEC, of which Iran and Venezuela are founders, chose late last year not to cut output despite lower prices and oversupply.

Rouhani, his oil minister and other top officials in Tehran have criticised fellow OPEC member Saudi Arabia for not supporting steps to support higher crude prices.

Rouhani was meeting with Maduro when he again appeared to point the finger at Riyadh, in remarks carried on the Iranian government’s website.

“Without doubt, cooperation of countries that are on the same line in OPEC can neutralise the plans of some powers who are against OPEC, stabilising a reasonable price for oil in 2015,” Rouhani said.

Iran’s present budget was based on an oil price of $100, leaving a big shortfall in recent months. In December, Tehran unveiled a draft budget for the next financial year predicated on $70 per barrel.

Iran and Venezuela pledged to reach agreements during Maduro’s trip that would “expand trade and investment, export of technical and engineering services and collaboration in pharmaceuticals.”

Venezuela has the world’s largest proven oil reserves but its economy, 96 percent of the government’s foreign currency comes from crude, has been gutted by inflation and basic goods shortages.

In late December, recession-hit Venezuela reported that inflation for the 12 months to November topped 63 percent, one of the highest rates in the world.