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Iran’s oil and gas revenue is projected to rise in real terms by 37% to $33bn in the 2017-18 draft budget from $25bn in the current year, President Hassan Rohani announced this week in his budget statement to parliament. The surge in revenue is due to a combination of rising oil exports following the lifting of sanctions in January and higher prices. But geopolitical uncertainty remains a major risk to revenue projections, while efforts to diversify the economy and reduce expenditure are sputtering.
The draft budget is based on an oil price assumption of $50/B, slightly higher than an actual Brent price of $47/B so far for the 2016-17 Iranian year which began on 21 March. Brent futures are currently averaging $56/B for the 2017-18 Iranian year (from 21 March 2017): Iran’s main export grade Iran Heavy typically trades at an average discount of $3/B to Brent.
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