Iran benefits from higher oil prices

Increasingly high oil prices are empowering Iran and undermining sanctions imposed against it, an analyst has claimed.

Simon Henderson, a member of the Gulf and Energy Policy Program at the Washington Institute think-tank, says that oil prices rapidly approaching $100 a barrel will give Iran greater financial room for manoeuvre.

The populous nation needs stronger oil prices than its wealthier Gulf neighbours to help meet its high social costs and avoid a deficit. Its budget is largely reliant on oil at $65 a barrel, which is already some way below the current prices of around $100 per barrel.

Mr Henderson said that rising oil prices would put Iran in a comfortable financial position, undermining sanctions which are designed to squeeze the country’s economy and bring Iran to the negotiating table over its nuclear programme.

US Department of Energy figures show that Iran’s revenues between January and November 2010 were $64 billion – $11 billion higher than for the whole of 2009.

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