Iran could cope with oil as low as $5 - Ahmadinejad

By Hashem Kalantari

TEHRAN (Reuters) - Iran could live with an oil price as low as $5 per barrel, President Mahmoud Ahmadinejad was quoted as saying on Sunday, in comments at odds with the views of the IMF and economic analysts.

Like other major crude exporters, Iran is facing declining revenue as global oil prices have tumbled by two-thirds to $50 per barrel since July amidst a world financial crisis, after years of windfall gains that have boosted reserves.

But Ahmadinejad, who is expected to run again in next year's presidential election, said the oil price fall would have no major impact on the economy of the world's fourth-largest crude producer, official media reported.

"There was a time when the country managed on $9 a barrel. We can do it even if oil falls to $5," he told reporters at a media fair in Tehran, state television said, without giving detail on how his government would handle such a situation.

Oil tumbled below $10 a barrel in 1998.

"Just as the world banking crisis has had no impact on Iran's economy, neither will the oil price have that much impact," the official IRNA news agency quoted him as saying.

U.S. crude traded at just below $50 per barrel on Friday and analysts say Iran will almost certainly have to cut spending in the 2009-10 budget unless the price bounces back to $70 or more, posing a challenge for Ahmadinejad during an election year.

The International Monetary Fund (IMF) said in a report in August that if the price of Iranian crude fell to $75 a barrel, Iran would face a current account deficit in the medium term that would be tough to sustain due to its financial isolation.