Commentary Magazine


Iran’s Oil Problems

The silver lining in the financial crisis? Oil is down to almost $70 a barrel–less than half of where it was in July when it hit record high of $147. Iran has been aggressively lobbying OPEC to cut production in the hope prices will climb again, though it does not look like Iran will volunteer to reduce its own output as part of this effort. The reason? Iran needs a high oil price–and cannot survive without oil revenue–in order to manage its chronically ill economy. OPEC will meet next month to decide on production cuts, but one should hope that U.S. allies in the Gulf–who can afford to live at lower prices and do not need to cut production– will rebuff pressures from Iran and other nations such as Venezuela. If there is one thing this administration should do now, it is call on our “friends,” the Saudis, to ensure that the global economy does not have to suffer from a renewed price hike designed to save Mahmoud Ahmadinejad’s and cover up his mismanagement of Iran’s economy.