Iran Plans for Oil Revenue to Fall to Zero as Budget Pressure Builds

Iran has loaded no crude since August 25, according to the US Treasury. Kpler estimates that payments from Chinese buyers, who typically pay one to two months after delivery, could stop around mid-December. Oil provides about 30% of the government budget directly, according to Gregory Brew of Eurasia Group and Miad Maleki of the Foundation for Defense of Democracies. Maleki estimates oil’s share at 50% to 60% of total regime revenue when indirect income is included.

Production has also fallen. Kpler put output below 2 million barrels per day in the months before late October, down from 3.59 million in February, when the war began. OPEC’s latest report puts production at almost half its pre-war level. The volume of crude and condensate held at sea outside the blockade zone dropped from 88.8 million barrels in July to zero by mid-October; another 43 million barrels remain stranded inside the zone.

Maleki expects a cash-flow disruption in December, not a state collapse. He told Fox News Digital in late October that more serious trouble would come when Iran could no longer pay to buy and transport goods imported overland. Esfandyar Batmanghelidj, founder and CEO of the Bourse & Bazaar Foundation, has described the downturn as a deep recession caused by an external shock. Iran’s Statistical Centre reported that GDP fell 10.1% year on year in the three months to June 20, while non-oil output declined 4.6%, The National reported.

Ghasemi’s proposed spending priorities are salaries, pensions and debt payments. The government has ruled out direct borrowing from the Central Bank and plans to expand its Kalabarg electronic coupon system to about 45 million low-income Iranians. It is also counting on oil deposit certificates, customs duties and stricter tax collection, but has offered little to replace lost oil income. Parliament could push spending higher: lawmakers raised last year’s proposed budget from 2% growth to about 30%. The government is due to send next year’s budget to parliament between November 22 and December 21.

The pressure is already visible in prices and currency markets. Tehran lawmaker Hossein Samsami said basic food prices had more than doubled since last December, including increases of 149% for eggs, 115% for imported rice, 113% for milk and 104% for red meat. Annual inflation reached 88.7% in the month ending October 22, according to the Statistical Centre. The dollar’s open-market price doubled over the same period, from about 130,000 toman to 260,000; one toman is 10 rials. Economists warn that the government may remain financially afloat while households grow poorer, and that budget cuts could bring further unrest.