Iran’s upcoming budget plan reveals a significant shift in its allocation of oil and gas export revenues, with more than half directed towards military spending. According to a report by Iran International, over €12 billion of the estimated €24 billion in revenue from these exports—about 51%—will go to the nation’s armed forces, including the Army, the Islamic Revolutionary Guard Corps (IRGC), and the Law Enforcement Forces (LEF).
The report details that while 42.5% of the oil and gas revenue will be used for general government operational expenses, only 6.5% is earmarked for “special projects.” A notable aspect of the budget is an increase in the official euro exchange rate, from 310,000 rials to 502,000 rials, which will significantly boost military funding from oil revenues. This change is expected to raise the armed forces’ income from €4.3 billion this year to over €12 billion next year.
The government plans to supply oil, priced in euros, to the military, which can then be sold on international markets. The report estimates that with an oil price of €57.5 per barrel, around 583,000 barrels per day will be allocated to the armed forces. The IRGC, for example, is reported to ship approximately 85,000 barrels per day to Syria, while most of the oil allocated to the armed forces is expected to be sold to China—which already purchases 95% of Iran’s oil exports.
In addition to oil revenues, the armed forces also receive financial support from other areas of the national budget, bringing their total funding to an estimated $17 billion this year. This figure includes $4.5 billion worth of oil shipments. The report notes that the next year’s budget draft does not provide detailed information on additional military funding, but it is clear that the trend of significant financial support for the armed forces will continue.
Iran’s reliance on oil and gas revenues remains evident, with next year’s exports projected to generate €64 billion. This figure includes €4.8 billion from gas exports and €59 billion from oil and petroleum products. Customs data indicated that last year Iran earned approximately $37 billion from oil and petroleum exports, and in the first half of this year alone, it has already reached $24 billion.
Although the budget lacks specifics on the volume of expected oil exports, it signals an increase in daily crude production by 350,000 barrels, bringing total output to 3.75 million barrels per day—all aimed at exports, with no new refineries planned. The National Development Fund (NDF), originally intended to receive 48% of oil export revenues, will see its share reduced to 20%, with the government borrowing back the remaining 28%, totaling €17.9 billion. Consequently, 65.5% of oil and gas revenue will flow into the government’s budget, with 14.5% allocated to the National Oil and Gas Companies and 20% to the NDF.
This practice of borrowing from the NDF has led to over $100 billion in debt that the government is unable to repay, depleting the fund’s foreign currency reserves and threatening its long-term sustainability. Initially, these assets were intended for private-sector loans, but now face uncertainty due to continuous borrowing.
Aside from oil exports, the government expects to earn an additional €4.5 billion from domestic sales of petroleum products and gas, according to the report.
