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Iran expects oil prices at five-year lows will put short-term pressure on the governments budget even as it strives to contain inflation, President Hassan Rouhani said.

Crude prices have declined about 40 percent from a June peak amid overproduction and slower demand growth. The Organization of Petroleum Exporting Countries decided on Nov. 27 to maintain its production target, prompting a drop in European benchmark Brent crude to less than $70 a barrel for the first time since May 2010.

The price of Brent has fallen from $110 to less than $70, a decline little before seen, Rouhani said yesterday in a speech to the countrys parliament in Tehran, according to the semi-official Iranian Students News Agency. Its necessary for next years budget to be adjusted with caution.

The plunge in crude comes as international sanctions imposed on Iran over its nuclear program are already curtailing crude exports, the Persian Gulf nations main income source. Iran agreed last month to extend negotiations intended to limit its nuclear work in return for an end to sanctions, which constrain the countrys exports to about 1 million barrels a day. The new deadline for the talks is July 1.

It looks very, very tough, said Robin Mills of Manaar Energy Consulting. Even after sanction are lifted, we still might be in for a couple more years of lower oil prices. Theyve got to plan for the long haul, said Mills, who worked in Iran as a geologist for Royal Dutch Shell Plc in the 1990s before heading Dubai-based Manaars consulting business.

The countrys new budget will cover the Iranian calendar year beginning March 21, 2015. Iran will need to rely on non-oil exports for growth and its inflation rate will slow to less than 20 percent by March 2015, Rouhani said, according to the ISNA report. Inflation slowed to 23 percent in the 12 months ending Aug. 22, according to data from the nations central bank.

The $311 billion spending plan represents a 4.3 percent increase over this years budget, the oil ministrys news agency Shana reported on its website. Iran is basing next years budget on an average oil price of $72 a barrel, Rouhani said yesterday, according to state-run Islamic Republic News Agency.

Crude shows signs of further decline over the days ahead, Mohsen Qamsari, director for international affairs at state-run National Iranian Oil Co., said in an interview with Shana. He declined to give a price forecast, according to the report today.

Oil may continue to trade at about $65 a barrel for the next six months, Kuwait Petroleum Corp. Chief Executive Officer Nizar Al-Adsani said today at a conference in Kuwait City.

European benchmark Brent crude and U.S. West Texas Intermediate both closed at the lowest per-barrel price in five years on Dec. 5, according to data compiled by Bloomberg. Brent extended its decline today, falling as much as $2.30 a barrel, or 3.3 percent, and trading at $66.87 as of 12:10 p.m. in London. WTI slumped to $64.16 in New York.

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Iran Budget May Face Short-Term Pressure From Oil, Rouhani Says