Iran Braces for a Budget Without Oil Revenue

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Iran is drafting next year’s budget under the premise that oil revenue could fall to zero, with senior budget official Mohammad Ghasemi telling the government on Monday to prepare…

Iran is drafting next year’s budget under the premise that oil revenue could fall to zero, with senior budget official Mohammad Ghasemi telling the government on Monday to prepare for that scenario, as the country appears to be weeks away from that eventuality.

Iran has loaded no crude since August 25, according to the US Treasury, and the oil it held at sea outside the US blockade fell from 88.8 million barrels in mid-July to zero by mid-October. Chinese buyers pay one to two months after delivery, so Kpler expects that revenue could stop around mid-December. Oil accounts directly for roughly 30% of the government budget, according to Gregory Brew of Eurasia Group and Miad Maleki of the Foundation for Defense of Democracies, and Maleki puts its share of total regime revenue at 50% to 60% once indirect income is counted.

According to Chatham House’s Bilal Saab, “The Iranian leadership is betting that if it holds out long enough, those with the most to lose from this economic crisis – Saudi Arabia, the UAE, Qatar, and Kuwait – will press Washington harder to find an exit.”

Mohammad Tabibian, who was deputy director of the Planning and Budget Organization under President Ali Akbar Hashemi Rafsanjani, told Shargh newspaper on Monday that endurance is the wrong measure of success. “Adapting to sanctions does not mean eliminating their harm,” he said. “A society can therefore gradually become poorer without experiencing a sudden halt to all economic activity.”

So, an exit isn’t in sight, and Kpler puts Iranian oil production below 2 million bpd in the months before late October, down from 3.59 million in February, the month the war began. OPEC’s latest report puts Iranian output at almost half its pre-war level. The US naval blockade imposed on April 13 then emptied the oil Iran kept at sea. Crude and condensate held outside the blockade zone fell from 88.8 million barrels on July 14 to zero by mid-October, and another 43 million barrels remain stranded inside it.

Maleki…

Esfa…

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