Iran needs oil prices at $195 a barrel to break even

Iran needs oil prices at $195 a barrel to break even
US sanctions appear to be biting Iran, according to an IMF report.
2 min read
28 October, 2019
Iran will need oil prices to rise rapidly to break even [file photo-Getty]
Iran needs oil prices to rise to almost $195 a barrel to break even, according to the International Monetary Fund (IMF), highlighting the damaging effects of US sanctions on the country.

The IMF report, published Sunday, paints a troubling picture of the Iranian economy, which has been under tough new US sanctions targeting Tehran's oil exports and banking sector.

The IMF said that Iran's economy is expected to contract 9.5 percent this year, up from an earlier estimate of 6 percent, according to Reuters.

Tehran is also expected to run a fiscal deficit of 4.5 percent in 2019 and 5.1 percent next year, after the country was hit hard by US sanctions.

The US pulled out of a nuclear deal with Iran in 2018 and enacted tough sanctions on the country, including attempts to cut Tehran's oil exports "to zero".

The embargo will see Iranian exports fall from $103.2 billion in 2018 to $60.3 billion this year and $55.5 billion in 2020.

Iran will need oil prices to rise from current levels of around $62 a barrel to $194.6 to balance the budget, the IMF said.

The economic damage means that Iran will see inflation rates of 35.7 percent this year, according to IMF forecasts.

Iran is suspected of hitting back at the sanctions by targeting oil installations in Saudi Arabia and tankers in and around the Strait of Hormuz.

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