Iranians awoke on Monday morning to a 30% increase in the price of bread – the most tangible consequence of an economy suspended between the twin pressures of falling oil prices and continuing international sanctions stemming from the Tehran’s regime failure to properly account for its nuclear program.
As a result, Iran’s currency, the rial, has declined dramatically in value. Currency traders reported on Monday that the rial fell by 7.25% against the US dollar, after last week’s failure to reach a final deal with international powers over Iran’s nuclear ambitions ended the regime’s hopes for an immediate lifting of sanctions… [ Note: The Tower, in an article today, puts the fall at 10%, quoting a Persian-language source].
…According to Reuters, the weakening rial and the fall in oil prices “could create problems for President Hassan Rouhani,” whom the agency describes as “a pragmatist elected last year on a promise of winning relief from the crippling sanctions by patching up relations with the West.”
The most immediate trigger for this latest bout of bad economic fortune to hit Iran was the decision last week by OPEC, the international petroleum cartel which supplies around 40% of the world’s oil, not to reduce its collective output to stem falling prices. OPEC’s move has damaged three of its members with faltering economies – Iran, Venezuela and Nigeria – as well as observer member Russia, and the continuing decline in the oil price will impact these countries primarily…
See this post from yesterday for more details on the alleged motive of the Saudis — to cut back on the production of US shale oil.