Iran slips deeper into recession, breakeven oil price hits $195

The Iranian economy will see massive contraction this year while its fiscal breakeven oil price will also jump from $155.6 per barrel in 2019 to $195 next year as US sanctions bite, International Monetary Fund said on Monday, October 28.

Iran economy contracted 4.8 per cent last year and it will slip deeper into the recession this year as economy will contract 9.5 per cent. For 2020, it will see zero growth, says IMF.

Tehran's breakeven price has also been consistently rising since 2016, rising from $58.4 a barrel in 2016 to $64.8 in 2017 and $82.0 in 2018. It is projected to rise further this year and the next.

"Iran's main export, oil, is severely restricted, and imports have collapsed. Some stability in the level of output is expected in 2020, culminating in near-zero growth," IMF said in its latest report.

As a result of tougher US stance, Tehran's crude production has been consistently declining over the last three years. Production, as per IMF data, is projected to slip from 3.49 million barrels per day in 2018 to 2.29m bpd this year and 2.11m bpd in 2020.

Even the Middle East and Central Asia region's outlook has been largely hit by shrinkage of Iran's economy. Economies of Middle East and North Africa and Pakistan (MENAP) will shrink by -1.3 per cent this year but will rebound next year to 2.1 per cent in 2020.

]waheedabbas@khaleejtimes.com