The Iranian parliament’s budget reconciliation committee has projected 1.5 million barrels of oil exports in 2021, which would be possible only if US sanctions are reduced by Joe Biden’s administration or a lack of enforcement by the incoming team at the White house.

ISNA news website in Iran reported Sunday [Jan. 3] that the committee decided 1.5 mbd in oil exports is achievable, while President Hassan Rouhani’s proposed budget had forecast more than two million barrels. 

The parliament dominated by hardliners scrambling to win the presidency in the June election, harshly attacked Rouhani’s proposed budget all through December, saying it is mostly based either on unrealistic assumptions of high oil exports or harmful plans of heavy borrowing. A final decision on the budget that will go into effect on March 21 when the new Iranian year begins, has remained in limbo.

The reconciliation committee further ruled that the presidential administration can only count on revenues from one million barrels of oil exports a day and anything beyond that has to be saved in the National Development Fund (NDF) or pay back billions of dollars taken out of the fund in the past few years.

By law, up to 30 percent of all oil revenues have to be invested in the NDF, which is essentially a sovereign wealth fund.

Rouhani had projected 26.5 billion dollars in oil revenues as a big chunk of his new budget and that was based on 2 mbd of exports. Now, if parliament says the government can only use income from half that amount of oil, it means the budget needs around $13 billion in new sources of revenues.

Iran is currently exporting much less than one million barrels a day by circumventing US sanctions. This means the oil goes to countries that barely pay any cash, such as Syria that takes the oil for free and China that writes off old debts. Oil prices are already low, hovering under $50 a barrel, which means clandestine sale of oil would hardly generate half that amount.

Expectation of higher oil exports at market prices can only become a reality if the United States reduces its oil sanctions on Iran that President Donald Trump imposed in 2018 after he withdrew from the 2015 Iran nuclear agreement. But President-elect Joe Biden has said he would return to the agreement, meaning he would most likely annule at least part of the sanctions Trump imposed.

This expectation is confirmed by the spokesman of oil products exporters union in Iran, which is a semi-official state representative. ISNA quotes Seyyed Hamid Hosseini who said that even if Biden does not return to the nuclear deal, Iran will have the opportunity to sell more oil.

“In Trump’s absence, the fear and apprehension he created and the follow-ups” his administration did to enforce the sanctions will disappear, Hosseini said.