Iran Prepares 1406 Budget for Zero Oil Revenue as Floating Stocks Decline
Key Facts
Iran is preparing its budget for Persian year 1406, spanning 2027 to 2028, on scenarios that include oil revenues falling to zero, as floating cargoes available to buyers dwindle. Mohammad Qasemi, deputy for coordination of programs and budget at the Planning and Budget Organization, said the government is factoring in that possibility as it prepares the next budget. This comes as Kpler said floating crude oil and condensate outside the blockade zone fell to zero in mid-October. The company attributed this to the unloading of the last cargoes in China earlier in the month. The development puts budget financing under pressure, as oil sales are a major source of government revenue and foreign currency.
Kpler said floating volumes outside the blockade zone fell from a peak of 88.8 million barrels on July 14 to zero in mid-October. But offshore inventories have not disappeared entirely: about 43 million barrels remained stranded inside the blockade zone, according to the company’s estimate in its Oct. 22 report. The distinction means that the depletion of oil outside the zone does not mean all cargoes at sea have run out. The company added that Iran has not loaded a crude or condensate cargo since Aug. 25. Tankers that loaded since mid-July have also been unable to cross the blockade line, according to the report.
The stranded inventories affect when cash reaches Tehran, as Chinese oil buyers typically pay one to two months after cargoes are unloaded, according to Kpler. The company said Iran’s crude and condensate revenues could dry up by mid-December if the situation continues. The disruption to loading and transit therefore affects financial flows after cargoes reach their destination, not just the volume of oil available for sale. Kpler estimated that oil sales account for about 30–40% of government revenue and are the country’s largest source of foreign currency. This reliance makes delayed collections directly relevant to the government’s ability to finance spending and obtain foreign currency.
Facing shrinking export opportunities, the National Iranian Oil Company has cut production to meet domestic needs, according to Kpler. The company said output fell to less than 2 million barrels per day in autumn 2026 as seasonal demand declined. Directing production toward domestic consumption limits the buildup of additional volumes that would need to be stored or exported, while external revenues remain tied to selling cargoes and collecting payment. The U.S. Treasury Department announced measures on Oct. 8 against 17 vessels in the shadow fleet, which it said had moved millions of barrels of Iranian crude oil, petroleum products and petrochemicals. The measures come amid restrictions on the shipping networks relied on by Iran’s oil exports.
The new budget faces a difficult economic environment, according to international estimates published in October. The International Monetary Fund forecast that Iran’s economy would contract 7.6% in 2026, then grow 3.6% in 2027, with inflation at 78.6% in 2026. The World Bank estimated that the economy would contract 7.8% in fiscal year 2026/27, with inflation at 74.2% and the fiscal deficit widening to 5.9% of gross domestic product. The estimates use different reference periods, but point to pressure on economic activity, prices and public finances as the budget is being prepared. Iranian crude and condensate exports to China also rose from 609 thousand barrels per day in 2018 to 1.567 million barrels per day in 2025, according to Vortexa estimates cited by the U.S. Energy Information Administration, illustrating the scale of the market Tehran relied on before the current restrictions.
Qasemi said the government would rely on other tools to offset a potential shortfall, including oil deposit certificates, targeted taxes and customs revenues. He added that spending had been arranged in three categories: unavoidable necessities, secondary priorities and conditional spending. The measures point to an effort to adapt financing and spending to the possibility of lower oil revenues, without meaning that the zero-revenue scenario has already materialized. In its forecasts published on Nov. 10, the U.S. Energy Information Administration said Iran’s exports would remain constrained during the forecast period. The agency expected most Middle East production outside Iran to return to pre-conflict averages by mid-2027, while the path of Iranian revenues remains tied to the continuation of restrictions and the timing of cargo payments.