Iran’s freshly-released draft 2015-16 budget cuts spending by 14% in real terms in the face of oil prices that are down by $48/B since June. This comes on top of a 20% cut for 2014-15. The latest budget is based on $72/B crude, down from $100/B.

Average export prices for Iran Heavy crude have fallen by a whopping $48/B or 45% from the peak of $107.5/B they hit in June. Meanwhile sanctions continue to constrain export volumes which have been stuck at around 1.2mn b/d (including condensate) since mid-2014, down from 1.7mn b/d for 2013 and almost 2.5mn b/d in 2011, before sanctions started to bite (see graphs). That year Iran’s oil export earnings hit a record $255mn per day, that is to say $93bn for the year as a whole – the height of former president Ahmadinejad’s spending largesse, spending that with hindsight is seen as totally unsustainable. (CONTINUED - 1831 WORDS)