Hamid Mollazadeh
Iran’s draft budget for the next fiscal year may be built on oil revenue projections that are roughly 20% more optimistic than market realities, according to a new report by the Parliament’s Research Center.
The warning raises fresh questions about how resilient public finances will be if exports or prices fall short of official targets.
In its review of the 1405 (March 2026-March 2027) budget bill, the research arm of parliament examined key oil and gas assumptions embedded in the government’s revenue tables.
Unlike previous years, the new draft is structured without traditional articles and clauses and instead consists mainly of revenue and expenditure tables.
It is also denominated in a “new rial,” equal to 10,000 of the current rials, a technical shift that analysts say adds another layer of complexity to budget scrutiny.
At the heart of the debate is the government’s forecast for crude oil and condensate exports. The budget assumes total export revenues of $34.9 billion next year, based on an average export price of $54 per barrel and daily exports of 1.772 million barrels.
But the Research Center argues that this outlook may be overly hopeful, especially given ongoing US pressure and uncertainty in global oil markets.
More Probable Scenario
Under what it describes as a more “probable” scenario, Iran would export around 1.5 million barrels per day at an average price of $53 per barrel.
That combination would generate approximately $29 billion in annual revenue. In more conservative and more favorable scenarios, revenues would range between $25.6 billion and $32.1 billion. Compared to the $34.9 billion assumed in the draft budget, even the probable case implies a 20% overestimation.
The report also explains how oil income is distributed within the budget. Only a portion of total projected oil and gas revenues goes directly to the government as its official share from crude, condensate and gas exports.
When additional resources such as withdrawals from the National Development Fund are included, oil-related funds make up a notable share of public revenues.
In total, oil and gas remain a cornerstone of the budget, accounting for roughly one-third of overall government income and highlighting the country’s continued dependence on the energy sector to finance its spending.
Production assumptions are also ambitious. The draft budget projects crude oil and condensate output at 4.412 million barrels per day, with exports at 1.772 million barrels per day.
Natural gas production is set at 276 billion cubic meters annually, with net exports of 16 billion cubic meters. Gas export prices are assumed at $0.3 per cubic meter.
Regional Energy Hub
On gas, however, the Research Center points to a different concern: under-targeting rather than overestimation. Iran’s Seventh Development Plan envisions the country becoming a regional energy hub, with gross gas exports reaching 40 billion cubic meters and net exports 20 billion cubic meters by the end of the program.
If exports are to rise steadily from a base of 16 billion cubic meters, next year’s target should exceed 18 billion cubic meters, the report argues. The 16 billion cubic meters assumed in the budget is about 10% lower than that trajectory—equivalent to roughly $750 million in forgone revenue.
Taken together, the findings suggest a budget caught between optimism and structural constraint. On oil, lawmakers’ researchers caution against counting on volumes and prices that may not materialize. On gas, they urge a more ambitious export strategy to align with long-term policy goals.
With oil and gas still providing more than a third of government income, the margin for error is slim. If exports disappoint, the fiscal gap could widen quickly, forcing either spending cuts, additional borrowing or heavier reliance on monetary financing.
In a volatile energy market shaped by geopolitics and sanctions, even small deviations from assumptions can carry outsized consequences for the balance sheet of the state.
