Parliament's Joint Commission Approves $40 Oil Price in Budget Bill

The Joint Budget Commission of the Iranian Parliament approved the proposed price by President Hassan Rouhani's government for the sale of 2.25 million barrels of oil per day next year at a price of $40 per barrel. In the budget bill, the price of each dollar is set at 2997 tomans. According to the Shana news agency, affiliated with the Iranian Ministry of Oil, members of the Joint Budget Commission met on Wednesday, March 12, with the presence of Bijan Namdar Zangeneh, the Minister of Oil, to review the oil revenue section in the budget bill for the year 95. According to the report quoted by Mohammad Reza Pourabrahimi Davarani, the spokesperson for the Joint Budget Commission, the government's proposal to forecast the sale of 2.25 million barrels per day in year 95 at a price of $40 per barrel has been considered. According to the Mehr news agency, quoting Mr. Davarani, if approved by the Parliament, oil revenues next year will amount to 68.5 trillion tomans. However, the agreement on the $40 price for Iranian crude oil comes at a time when the average price of North Sea Brent crude, which is more expensive than Iranian oil, was $54 last year and reached just over $32 in the first two months of this year. Meanwhile, international assessments expect the price of oil in this current year, 2016, to be around $40. In this context, Reuters also published an assessment from 40 companies and international experts regarding oil prices, predicting the price of Brent crude oil for this year to be $40.10 per barrel. Regarding the amount of crude oil exports, Reuters assessed that Iran has increased its oil exports by 200,000 barrels per day over the past two months. Before the sanctions, Iran exported 2.2 million barrels of oil and gas condensates daily, but this figure dropped to about 1 million barrels during the sanctions. Iran's gas condensate exports before the sanctions were 300,000 barrels per day, which, according to the Iranian Customs report, has been about 380,000 barrels per day in the first ten months of the current solar year. Iran had stated before the sanctions that as soon as the JCPOA, the nuclear agreement, was implemented, which occurred at the beginning of last January, it would increase its oil production by 500,000 barrels per day and would increase production by the same amount again in the second half of 2016. However, assessments from international organizations such as the U.S. Energy Information Administration or the International Energy Agency indicate that Iran's oil production is likely to increase by 300,000 to 500,000 barrels per day in 2016. In this context, the direction of the 95 budget bill of Hassan Rouhani's government is being questioned by members of the budget commission, stating that a $40 oil price in the budget is not logical. Seven members of Parliament have called the sixth program bill illegal, while some promise to increase Iran's oil production to 4.7 million barrels per day. Moody's states that production problems hinder Iran's return to global oil markets, and the Energy Agency predicts that low oil prices will continue for another year.