Iran's Oil Revenue Projections for 2024
Navigating Through Global Dynamics and Domestic Challenges
The Research Center of the Islamic Consultative Assembly (Iranian parliament) has thoroughly analysed the anticipated oil prices for the coming Persian year from March, utilizing data from international organizations and forecasting Iran's oil revenue for the fiscal year 1403. Given the significant reliance of the government's revenue on the oil sector in Iran's economy, fluctuations in oil prices can markedly influence the nation's financial stability.
The center has devised three distinct scenarios for the global oil prices, using estimates from international institutions to predict the oil revenue status of the country in the upcoming year. According to the report, the Brent oil price is projected to vary, with a high of $91 and a low of $74 per barrel. On this basis, Iran's oil revenue in the best-case scenario is forecasted to reach $41 billion, and in the worst case, it is estimated at $28.5 billion.
For 2024, global oil prices are expected to range between $74 to $91. Oil, being a commodity with a global market, has its prices determined by global supply and demand equations. One of the primary benchmarks for setting the global price is Brent oil, a type of light crude oil extracted in Europe, and is often used as a reference for global oil price predictions.
The Research Center of the Islamic Consultative Assembly, based on forecasts by international organizations, has considered three scenarios for Brent oil prices in 2024. The high estimate is $91, the medium is $83, and the low is $74 per barrel. This price variation is attributed to the existing uncertainties in the global arena. Recent tensions in the Red Sea and Persian Gulf, increased oil production in countries like the USA, Canada, Brazil, and others, as well as the disruption of Russian oil exports to Europe, are among the factors contributing to oil price volatility.
Recent Houthi attacks, backed by Iran, against commercial ships in the Red Sea have significantly disrupted global shipping and supply chains, elevating risks in the region. Since mid-November 2023, the Houthi rebel group has indiscriminately targeted dozens of commercial vessels, prompting major shipping companies to halt or reroute their ships to avoid the Red Sea corridor. This shift has led to increased transportation costs and longer shipping times, potentially escalating global consumer prices and impacting the global economy. The United States has responded by forming a 10-nation naval task force, Operation Prosperity Guardian, to protect commercial vessels and ensure freedom of navigation in the southern Red Sea and the Gulf of Aden. These developments have raised concerns about a wider regional conflict, as the Houthis have expanded their target range to include vessels linked to countries opposing their actions, including the U.S. and the UK
However, the price of oil in Iran is also influenced by OPEC pricing, ongoing sanctions, and external pressures, and future oil revenue scenarios are predicted accordingly.
Regarding Iran's oil export revenue in 1403, the budget proposal considers factors beyond the likely oil price scenario in the country. Due to sanctions and external pressures, Iranian oil is often sold at a discount, and its export volume faces limitations. Recent analyses show that the price fluctuations of Iranian heavy oil have been in line with Brent oil price changes. During this period, the highest price for Iranian heavy oil was recorded at $94 per barrel in September of the current year.
Alongside the price, another factor affecting the country's export revenue from oil is the number of barrels it can export each day. Exports are affected by production levels and political factors. According to the Research Center's report, oil production in recent quarters has seen an increase, reaching 2.99 million barrels per day in the third quarter of 2023. Policies have been implemented to diversify export destinations for oil, with countries in South America and Africa, alongside China, purchasing oil from Iran. However, precise statistics on the country's oil exports are not publicly disclosed, and only estimations exist. Best-case scenarios suggest over 3 million barrels daily in exports, but these are estimates by international shipping companies monitoring satellite traffic.
The Research Center of the Islamic Consultative Assembly has estimated Iran's daily oil export volume in various scenarios, thereby predicting the country's export revenue from this sector for the next year. Based on these estimates, in an optimistic scenario, Iran's oil revenue could reach $41 billion, translating to exporting 1.234 million barrels per day. In a pessimistic scenario, the export revenue might be around $28.5 billion, with a daily export of 1.095 million barrels. The most likely scenario suggests that the export revenue might total approximately $33.2 billion, with a daily export of 1.055 million barrels of crude oil.
However, the government has also provided its forecast for oil revenue in the next fiscal year in the 1403 budget proposal. According to this, Iran is expected to sell 1.35 million barrels per day at a price of $71, leading to an annual export revenue of about $34.985 billion. Comparing this figure with the research center's likely scenario suggests that the government's estimate of oil revenue exceeds the center's prediction by approximately $1.785 billion.