Wednesday, January 24, 2007

Iran may soon find itself in financial trouble

A news analysis piece by Robert Windrem explains the predicament that Iran is beginning to find itself as oil prices begin to fall.

Saudi Arabia is putting on the squeeze. Some excerpts:

For the Saudis, who fear Iran’s religious, geopolitical and nuclear aspirations, the decision to lower the price of oil has a number of benefits, the biggest being to deprive Iran of hard currency. It also may create unrest in a country that is its rival on a number of levels and permits the Saudis to show the U.S. that military action may not be necessary.


The trader notes that Iran, OPEC’s second largest producer, is “in trouble” both in the short and long term. Iran’s oil reserves, he notes, are declining more rapidly than Saudi Arabia’s and are more difficult to extract. While a barrel of oil costs the Saudis $2-3 to get out of the ground and to market, that same barrel costs Iran as much as $15-18.
It seems Iran may be forced to slow down its race to nuclear stardom if cash becomes harder to come by. After all, it has little other industry to speak of.

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