March 3, 2024
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OIL & GAS

Iran Forecasts Less Income from Oil and Gas Exports Next Year

Iran’s budget bill for 2024-2025, indicates a significant decline in oil and gas export revenues, and a surge in domestic energy prices.

The draft of the bill presented to the parliament outlines a projection of 1.35 million barrels per day for oil exports at an average price of €65 per barrel (approximately $71) in the upcoming fiscal year (starting March 21), representing a 10% reduction in volume and a 16% decrease in prices compared to the current year’s budget.

Despite these cuts, the overall forecast for oil revenues in the budget indicates only a 3% decrease from the current year, signalling a substantial increase in domestic energy prices, particularly impacting industries, businesses, and households.

Davoud Manzoor, the head of the Planning and Budget Organization, recently disclosed a 40% overestimation in oil export revenues for the current year, leading to a significant budget deficit.

This suggests a shift toward raising domestic energy prices due to disappointment with oil export revenue growth, contradicting claims by Iranian oil officials, including the Minister of Oil, about an increase in the country’s oil production and exports.

International reports in August and Iranian official statements indicated that daily exports had well surpassed 1.5 million barrels, but next year’s budget projection is based on the lower number.

Data from the commodity intelligence company Kpler and energy consultancy firm Vortexa suggest that Iran’s daily oil exports to China have remained below 1.05 mb/d in ten months of 2023. Despite a notable summer increase, shipments declined in the fall.

Additionally, recent US legislation intensifying sanctions on Iranian oil, if implemented, could further restrict Iran’s oil exports.

The draft budget for this and the next fiscal year does not distinguish revenues from the domestic and foreign sales of oil and gas. However, the government’s forecast of a 50% surge in next year’s tax revenues indicates that the Raisi administration aims to place a greater burden on the Iranian people to compensate for budget deficits.

The Parliament Research Center has predicted that this year’s government budget will face a deficit of 4,250 trillion rials ($8.5 billion based on USD rate in Iran’s open market), which equals 20% of the current year’s budget.

In the current fiscal year, the Iranian government has projected daily oil exports at 1.35 million barrels per day (mb/d) with a price of $71 per barrel. However, Iran’s actual daily oil exports to China, its main customer, hover just above one million barrels, and despite current global oil prices reaching around $74 per barrel, Iran offers a discount of about $12 per barrel to Chinese refineries.

In the current fiscal year, the Iranian government has set a target of 1.35 million barrels per day (mb/d) for daily oil exports, with a projected price of $71 per barrel. However, Iran’s actual daily oil exports to China slightly surpass one million barrels.

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