Oil, gas and Iran economic analyst
Iran's newly published budget law reveals the Islamic Revolutionary Guard Corps’ (IRGC) major share of oil revenues and public funds—and opens the door for the IRGC and Supreme Leader–linked institutions to take control of state assets.
In the past Iranian year, which ended on March 20, a portion of the country’s oil exports was allocated to the armed forces—particularly the IRGC—under the pretext of “strengthening national defense.” This year not only has the military’s share of oil export revenues grown significantly, but direct government budget allocations to the armed forces have also sharply increased. Additionally, the law expands the authorization for crude oil transfers to other entities, including those involved in nuclear programs.
Meanwhile, the budget law allows IRGC-affiliated entities—such as Khatam al-Anbiya Construction Headquarters—as well as institutions linked to Supreme Leader Ali Khamenei’s office, like the Execution of Imam Khomeini’s Order (EIKO), to acquire state assets as a means of settling government debt owed to them.
Military's share of oil
President Masoud Pezeshkian’s government has projected daily oil exports of 1.85 million barrels for the current fiscal year, which began on March 21. Of this, one-third—valued at $12.4 billion—will be directly allocated to the armed forces and their specialized military projects, a figure that has tripled compared to the previous year. The remaining oil revenues, along with total gas export earnings, estimated at $33.5 billion, will be divided among the government budget, the National Development Fund, and the National Iranian Oil Company.
Another key point is that the government has set the exchange rate for oil allocated to the armed forces at roughly 600,000 rials per euro—while the euro trades at around 1.14 million rials on the open market. This disparity creates a major financial windfall for the military, enabling them to sell the oil and convert the proceeds at market rates, effectively pocketing the difference.
Moreover, the military has priority in oil sales, meaning any decline in national exports will primarily impact the government’s share. If the armed forces are unable to export their allocated share, the government is obligated to compensate them with equivalent cash payments.
Despite the government’s target of exporting 1.85 million barrels of oil per day this fiscal year, data from commodities intelligence firm Kpler—obtained by Iran International—shows that the average daily delivery of Iranian crude to Chinese ports, Iran’s sole oil customer, stood at approximately 1.34 million barrels in the first quarter of 2025. That’s down from a daily average of 1.5 million barrels in 2024.
Additionally, the Trump administration has launched a campaign to reduce Iran’s oil exports to “zero”, and several tanker tracking and energy consulting firms previously told Iran International that Iranian oil exports could drop by about half a million barrels per day in the coming months.
Kpler also reported this week that Chinese independent refineries, known as "teapots," appear to be pausing new orders of Iranian crude oil following Washington's first imposition of sanctions on a Chinese refinery, Shandong-based Shouguang Luqing Petrochemicals.
In addition to the armed forces, the Iranian government has authorized five other entities—including those involved in “nuclear energy projects”—to sell oil directly.
At least part of these funds will likely be directed toward nuclear activities unrelated to electricity production, like sensitive and controversial uranium enrichment that the US and its allies object to.
Moreover, beyond revenues from direct oil sales under the so-called “strengthening national defense” initiative, the military and security forces are also set to receive 10% of the government’s general budget for personnel salaries.
Transfer of state assets to the military and supreme leader's office
Amid a lack of transparency surrounding the economic activities of the IRGC and institutions under the Supreme Leader’s control, unofficial reports suggest these entities dominate roughly half of Iran’s informal or “shadow” economy. Over the past two decades, much of the government’s privatization program has veered off course—rather than transferring assets to the true private sector, state-owned properties have been handed over at heavily discounted rates to the IRGC and Supreme Leader–affiliated institutions.
These entities also play a major role in Iran’s infrastructure development. Yet the exact amount the government owes them for state-assigned construction projects remains unclear. What is clear, however, is that the 2025 budget law specifically authorizes the IRGC-linked Khatam al-Anbiya Construction Headquarters and the Supreme Leader–controlled Execution of Imam Khomeini’s Order (EIKO) to receive up to two quadrillion rials (approximately $2 billion) worth of state assets as repayment for outstanding government debts.
This year, the government plans to sell 15.8 quadrillion rials in state-owned assets, of which 13% is earmarked for transfer to the military and institutions tied to the Supreme Leader—if budget targets are met. Given the weakness of Iran’s private sector, it is widely expected that, once again, entities under the IRGC and Supreme Leader’s control will acquire the lion’s share of these assets.
