Iran parliament downsizes oil revenues for new budget

The Trans-Asian Oil had signed a deal in 1968 to transport Iranian oil to Israel across the Red Sea (AFP Photo/Behrouz Mehri) (AFP/File)

Tehran (AFP) - Iran's parliament has cut by 25 percent projected oil revenues in the draft budget for 2015-2016 to reflect the drop in price on the international market, media reported Monday.

The decision was taken by lawmakers as they voted point by point on the draft budget submitted in December and which must be ratified by the end of the Iranian fiscal year on March 20.

President Hassan Rouhani admitted in an address to parliament in December that the budget "would be under pressure" because of the fall in oil prices.

He said oil revenues earmarked for the 2015-2016 budget would be $24 billion, down from $27.5 billion, meaning less than half of the government's income would come from exported crude.

This had been based on oil prices remaining at around $72 per barrel.

Between June and late January crude prices plunged 60 percent to around $40 per barrel over concerns of a supply glut before edging higher to around $60.

As a result parliament voted to cut by 25 percent oil revenues earmarked in the budget to $18.5 billion but also earmarked an additional $5 billion to restructure the budget should prices rise again, media reported.

Iran has the world's fourth largest proven oil reserves and currently exports around 1.3 million barrels per day.

According to the oil ministry, since January this year Iran has been selling a barrel of oil at an average of $40.

The Islamic republic has been among the worst hit oil exporting countries because of the sliding price of crude, given that its current budget was based on sales of $100 a barrel.

Media also reported on Monday that parliament has approved the transfer of 20 percent of oil revenues into Iran's sovereign fund, down from 30 percent in the current budget.

Next week parliament is expected to vote on other articles in the budget, including the exchange rate of the rial against the dollar.