Tehran February 22 2022: Iran’s parliament has decided to raise its forecast for oil sales and price in the upcoming financial year that starts in March amid the inclusion of barter deals for its crude, semi-official news agency ISNA quoted a parliamentary official as saying on Feb. 20.
Iran’s parliament forecast sales of 1.4 million b/d based on a $70/b price, up from the previous estimate of 1.2 million b/d based on a $60/b price, spokesman of the parliament’s presiding board Nezameddin Mousavi was quoted as saying by ISNA.
The lawmakers’ decision came after the oil ministry gave assurances that it can export more than the 1.2 million b/d proposed in the government’s bill, he said.
The lawmakers have counted on barter deals in the new estimated figure in the financial year that starts on March 21, members of parliament noted in their budget bill discussions.
Due to a decrease in forecast government revenue in next year’s budget, the parliament decided to raise its oil sales estimate to 1.4 million b/d, Hamidreza Hajibabaee, head of the budget examination commission of the parliament, said.
If the government was able to export more than 1.2 million b/d, the rest can be sold through barter deals, he added.
Nuclear talks
The parliament’s decision on the budget bill is yet to be discussed and signed off by the higher legislative body — the Guardian Council.
Iran is currently involved with intense negotiations with signatories to a 2015 nuclear agreement to secure a new deal that will lift US sanctions on its energy industry. The US administration of former president Donald Trump withdrew from the deal in 2018 and re-imposed sanctions that have crimped Iranian crude exports.
Talks to revive the Join Comprehensive Plan of Action of 2015, which set restrictions on Iran’s nuclear program in exchange for relief from US sanctions, stalled in mid-2021 but restarted in December.
Washington’s sweeping sanctions against Iran’s oil sales are aimed at halting its exports, which have been slashed by up to 91% from 2018-2020. According to state news agency IRNA, Iran’s oil revenues plummeted by some $98.6 billion due to the stringent sanctions.
However, Iran has been able to find unconventional ways to maintain some crude exports, particularly to its biggest traditional customer China. Iran has also increased product sales to its neighbors as well as to Venezuela to make up for the lost oil income.
Lost oil income
Iran loses money each year on oil sales due to extra costs, Hamid Hosseini, head of the oil, gas and petrochemical exporters’ guild, was quoted as saying Feb. 19 by non-state news outlet Entekhab.ir.
“We spend extra expense on transportation, money transfer, discounts to customers,” Hosseini said. “Therefore, we lose $10 billion-$15 billion [each] year … because of the oil sanctions. In addition to [average] 700,000-800,000 b/d that we sell now, we could sell 2 million b/d of oil and condensate,” Hosseini said.
The OPEC member has vowed to raise its oil output to the pre-sanctions level of 4 million b/d by late March. This would require Iran to revive wells and find ways to drill more than 1 million b/d.
Iran, which is exempt from OPEC production quotas, pumped 2.52 million b/d in January, according to the latest Platts OPEC+ survey.
According to S&P Global Platts Analytics, an interim deal could allow Iranian exports to grow by 500,000 b/d in April and May, while a comprehensive agreement could allow 1.5 million b/d of export growth within nine months of sanctions relief.
Iran’s oil minister Javad Owji said on Jan. 15 that oil prices of $80-$90/b are “favorable” as the country eyes almost $30 billion from crude sales in the next financial year starting in March, oil ministry news service Shana reported.
Iranian officials don’t disclose figures on oil production and exports, but they have said both output and sales have recently increased despite the restrictive US sanctions.
