Iran vows to help Venezuela to stem oil price fall
The plunge in crude prices has pummeled the public finances of Iran and Venezuela
Iran’s supreme leader Ayatollah Ali Khamenei told Venezuela’s president on Saturday he backed coordinated action between Tehran and Caracas to reverse a rapid fall in global oil prices which he described as a “political ploy hatched by common enemies.”
President Nicholas Maduro is on a tour of fellow OPEC countries to lobby for higher oil prices, which hit new lows last week below $50 per barrel, nearly half of what they were back in June 2014.
The plunge in crude prices has pummeled the public finances of Iran and Venezuela, whose economies rely heavily on oil exports.
“The strange drop in oil prices in such a short time is a political ploy and unrelated to the market. Our common enemies are using oil as a political ploy and they definitely have a role in this severe fall in prices,” Khamenei said in talks with Maduro.
“[Khamenei] endorsed an agreement between the presidents of Iran and Venezuela for a coordinated campaign against the slide in oil prices,” the official IRNA news agency said.
Venezuela’s economy contracted in the first three quarters of 2014 and its international reserves have deteriorated sharply due to the tumbling oil prices. The decline has spurred concerns that Venezuela may default on its foreign bonds, which in turn has pushed its bond yields to the highest of any emerging market nation. Maduro has denied his country will default.
Earlier on Saturday, Iranian President Hassan Rowhani said OPEC hawks Iran and Venezuela “can undoubtedly cooperate to thwart world powers’ strategies ... and to stabilize prices at a reasonable level in 2015.”
Already hit by global sanctions over its suspected nuclear program, Iran has been particularly frustrated by the failure of OPEC countries to cut output to ease the existing glut in the oil market.
At its previous meeting on Nov. 27, the cartel decided to keep output at 30 million barrels per day. Saudi Arabia blamed the weak market on oversupply by non-OPEC producers such as Russia, Mexico, Kazakhstan and the United States. OPEC is due to meet next in June.