The drop in oil prices in the global market has been causing heavy damage to the Iranian economy in the past few months. According to Iranian Oil Minister Gholam-Hossein Nozari, this ongoing trend may badly damage the local oil industry.
In an interview to television network al-Alam, the minister stated that his country's goal was to see an oil barrel sold for about $80, compared to $40-50 in the past few weeks.
"If we want to be able to continue developing the Iranian oil fields, the price of an oil barrel must range between $75-80," Nozari said.
He also criticized the mechanism of oil supply to the global market, stating that the cuts announced by members of the Organization of the Petroleum Exporting Countries (OPEC) were inefficient, as other countries made sure to complete the deducted quota.
"If the countries fail to coordinate their moves to cut production with OPEC, these moves will have no effect," the Iranian minister added, saying that good coordination between all the countries producing oil could push the price of an oil barrel to $60 by the third quarter of 2009.
This estimate appears particularly positive, as the International Energy Agency (IEA) recently released a forecast for 2009, stating that the global demand for oil would drop by some 2.4 million barrels a day due to the financial crisis.
In September 2008, OPEC members controlling 40% of the global oil market decided to gradually cut the daily production by some 4.2 million barrels. The organization's 12 members are expected to meet again in Vienna in late May.
is the organization's second largest manufacturer after Saudi Arabia. The Iranian minister was ambiguous on the decision slated to be made during the meeting on whether to continue cutting production or not.
"We must evaluate this issue according to the situation in the market and the global demand, and then decide whether there is room for an additional reduction," he replied when asked if his country would support additional cuts in the production.
Doron Peskin is head of research at Info-Prod Research (Middle East) Ltd.