Iran Prepares Zero-Oil-Revenue Budget Amid US Blockade

Iran is preparing a zero-oil-revenue budget as crude export income faces the prospect of drying up by mid-December, according to OilPrice. Senior budget official Mohammad Ghasemi instructed the government to prepare for the scenario as the country faces potential complete halts in oil revenue.

Data from the US Treasury and Kpler cited by OilPrice show Iran has loaded no crude since August 25, while oil held at sea outside the US blockade dropped from 88.8 million barrels in mid-July to zero by mid-October. With Chinese buyers paying one to two months after delivery, analysts expect revenue to stop around mid-December.

Production and Economic Impact

Iranian oil production fell below 2 million barrels per day in the months prior to late October, down from 3.59 million in February. OPEC figures indicate output sits at nearly half pre-war levels. The economic pressure has driven down non-oil output and contributed to a deep recession, with Iran's Statistical Centre reporting total GDP 10.1% lower year-on-year in the three months to June 20.

Tehran's proposed spending plan for next year prioritizes salaries, pensions, and debt payments while ruling out direct borrowing from the Central Bank. However, analysts note the fiscal squeeze could spark economic turmoil as the government works to balance cuts against a parliament historically prone to raising spending.

Key facts

• Iran drafted its next budget under the premise that oil revenue could fall to zero by mid-December.
• The US Treasury reported no crude loaded by Iran since August 25.
• Iranian oil held at sea outside the blockade fell from 88.8 million barrels in mid-July to zero by mid-October.
• Oil accounted directly for roughly 30% of the government budget, according to analysts cited in the report.