Iranian President Hassan Rouhani said on Tuesday that countries behind the fall in global oil prices would regret their decision and warned that Saudi Arabia and Kuwait would suffer alongside Iran from the price drop.
“Those that have planned to decrease the prices against other countries will regret this decision,” Rouhani said in a speech broadcast on state television as oil plunged to near six year lows on international markets.
“If Iran suffers from the drop in oil prices, know that other oil-producing countries such as Saudi Arabia and Kuwait will suffer more than Iran,” he added.
Oil prices have fallen 60 per cent from their June 2014 peaks, driven down by rising production, particularly of U.S. shale oil, and weaker-than-expected demand in Europe and Asia.
Earlier this month, Iran described Saudi Arabia’s inaction in the face of the six-month price slide as a strategic mistake, but hoped that the kingdom, Tehran’s main rival in the Gulf, would respond.
On Tuesday, Rouhani singled out Kuwait and Saudi Arabia’s budget dependency on oil exports.
Data showed that 80 per cent of Saudi Arabia’s budget is based on oil sales, while in Kuwait the figure stands at 95 per cent, he said in a speech in the city of Bushehr.
In 2013, oil accounted for roughly 90 per cent of Saudi Arabia’s overall budget income and Kuwait at 92 per cent, according to Reuters’ calculations based on official data.
On the other hand, only one-third of Iran’s budget is based on oil sales, with an estimated 60 per cent of the country’s exports tied to oil, Rouhani said.
Due to Western sanctions on Iran over its nuclear programme, Iran’s oil exports have dropped from 2.5 million barrels a day in 2011 to about one million barrels per day on average, according to the U.S. Energy Information Administration (EIA).
Iran had adjusted to the drop in exports due to higher oil prices, but that buffer no longer remains today.
The United Arab Emirates energy minister repeated on Tuesday that the Organisation of the Petroleum Exporting Countries (OPEC) would not cut output to support prices.
Saudi Arabia and other wealthy Gulf Arab countries have accumulated hundreds of billions of dollars of reserves due to high oil prices over the years.
Saudi authorities appear confident they can ride out the market slide, with state spending set to hit a record this year.