By Arif Hudaverdi Yaman
ANKARA
Iran's desire to raise its oil revenues by building new oil field technologies may collapse on the free fall of crude oil prices, energy experts said.
"The fall in oil prices will have an enormous negative impact on the Iranian economy and its energy strategy," said Justin Dargin, Middle East energy expert from Oxford University.
"The recent drop in oil prices will likely impact the Iranian economy much more than Western sanctions have over the past few years," Dargin added.
He pointed out that President Rohani came to power with the promise of having Western sanctions removed and thereby improving the lives of ordinary Iranians. However, the decline in the international price of oil is having vast repercussions throughout the macro economy and is weakening Iran’s hand in its negotiations with the West over its nuclear program and the possibility of lifting of sanctions.
As crude prices have dropped much below Iran's breakeven oil price to stabilize its economy of slightly over $100, Dargin said, "Iran may be forced to charge more for domestic sales of oil, which would anger much of the middle class as they have been squeezed by years of economic mismanagement and Western sanctions."
Lately, Iran has tried to broaden its oil clientele by diversifying its oil products with new technologies in Iranian oil terminals.
Pirouz Mousavi, managing director of Iran Oil Terminals Company said in early October that a new technology will be used for the first time in Iranian oil fields which will mix heavy and light oil.
The stark decline in the price of oil, however, is likely to impact the amount of revenue that Iran funnels to research and development for advanced oil field technology, Dargan explained.
“What will happen is that Iran will jointly produce oil extraction technology with some of the larger Asian oil companies," he said.
The fall of the Brent crude prices, due to surplus supply, will likely drop further as there is no signal from the biggest producer, Saudi Arabia, to cut production.
Dargan said that Iranian anger at Saudi Arabia is likely to be on the rise, explaining that Iran blames Saudi Arabia for its politically-motivated increased production to keep prices at a low level to “punish” countries such as Iran for its geopolitical stance in the region.
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