Iran: Historically Low Oil Prices “No Threat” to Country

The Iranian oil ministry has declared itself ready and able to cope with oil prices should they reach $25/barrel. Tehran had previously allied itself with countries such as Venezuela whose economies depend heavily on hydrocarbons profit to function, though the most recent diplomatic offensive appears to have failed to have the desired effect. Bijan Namdur Zanganeh, Iran’s oil minister, appears defiant in stating that the historic drop in oil prices will pose “no threat” to the Iranian economy, despite reports predicting that the opposite will occur. Global oil prices fell again today as both global oil benchmarks sunk below $48 for the first time.

Iran’s oil sector is unique when compared to other Gulf petrol producers. Iran has not had the luxury of building up the vast reserves of hydrocarbons necessary to weather “extremely low prices,” and relies on revenues from oil to pay down its budget deficit. Oil revenues have dropped 30% and sparked a debate amongst the Iranian populace over the need for government revenue stream diversification. Such a diversification is unlikely given the severity of sanctions currently leveled against Iran’s economy, raising an altogether new set of questions that will likely be covered in ongoing negotiations over Iran’s nuclear program.

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News Briefs:

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  • A think tank based in Bishkek, Kyrgyzstan has accused ISIL of allocating approximately $70mn USD to destabilizing Central Asia. According to the Religion, Law and Politics analytical center in Bishkek, a division of ISIL whose name translates to Transoxiana has been awarded vast sums of money to promote dissent in Kazakhstan, Tajikistan, Uzbekistan and Kyrgyzstan. The think tank would not name the sources it drew from to obtain the information, and recognized that reports of increased extremist activities in Central Asia are yet unconfirmed.
  • On a related note, the government of Uzbekistan announced that it is beginning renewed training programs designed to counter looming extremist threats. Conscription and alternative military training is mandated under Uzbek law for all men between 18 and 27, and the Uzbek government has already stated that their demand for conscription has already been met and surpassed, despite rigorous standards of physical and mental health that govern who ultimately makes it into the armed forces.  Uzbekistan’s national government has prioritized a strong border with Afghanistan as well as stronger infrastructure in tumultuous regions such as the Fergana Valley.
  • Russia’s defense ministry announced that it may soon send an “air defense missile system” to Iran. The long-overdue delivery was due in 2010, though Moscow never delivered its end of the deal. The statement comes on the heels of bilateral meetings which saw the two countries agree to renewed defense and technological cooperation. An ambiguous “step” was taken towards resolving the dispute, though no additional detail was made available.
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