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Iran forecasts crude oil price at $42 to $50 in next fiscal budget

Crude oil prices dropped nearly 60 per cent since June last year and Goldman Sachs says it may fall to $20 a barrel in 2016

Iran has projected average oil prices at $42 to $50 per barrel as a base scenario in the coming year’s draft budget bill. The country aims to increase oil exports as sanctions against it are being lifted following a nuclear deal with world powers in July,

“In consultation with the Ministry of Petroleum, three price options of 42, 45, and 50 dollars were discussed, which are expected to earn 68 trillion tomans (roughly $22.5 billion),” oil news agency Shana quoted government spokesman Mohammad-Baqer Nobakht as saying in a televised program.

Oil prices have fallen nearly 60 per cent since June 2014. In August, benchmark Brent crude traded between $42 and $55.

Meanwhile, major US bank Goldman Sachs said last week that the crude oil price could more than halve again, to slump to just $20 a barrel by 2016, due to the largest global surplus in modern times and slowing demand growth, especially from the slowing Chinese economy.

Though $20 a barrel oil is not Goldman’s base-case scenario, the bank insists that if the oil producing countries fail to rein in their output the prices would see that level to clear the oversupply.

The bank has asked the US to cut its oil production by 585,000 barrels a day and has stressed that non-OPEC (Organization of Petroleum Exporting Countries) output must decline by a further 220,000 barrels a day to reduce the global surplus by the fourth quarter of 2016.