Iran Grapples with Billions in Missing Oil Revenue Amidst Sanctions

As the United States maintains a naval blockade of Iran’s ports and imposes further sanctions on its oil exports, Tehran is facing a significant challenge: billions of dollars in revenue from past oil sales that have reportedly gone missing. A spokesperson for Iran’s judiciary announced in September that a network of oil intermediaries, known as “trustees,” owes the Iranian government between 10 billion euros ($11bn) and 11 billion euros ($12bn). This sum represents approximately half of the total oil revenue projected in Iran’s government budget for the current fiscal year.

US officials, including Treasury Secretary Scott Bessent, have pointed to Iran’s difficulties in accessing oil revenues as evidence of the effectiveness of their economic pressure campaign. Bessent stated in August that “Iran’s shadow banking system was buckling” under the US pressure, which has intensified as Washington seeks to compel Tehran to capitulate in the ongoing conflict initiated by the US and Israel in late February.

The current crisis and the substantial debt owed by these intermediaries stem from an oil-sales arrangement implemented by Tehran in 2012. This strategy was adopted in response to US sanctions targeting Iranian oil exports, which began in 2012 with the stated aim of curbing Iran’s nuclear program by restricting its oil revenue.

Unable to sell oil through the Oil Ministry and receive proceeds via the Central Bank, the Iranian government began selling oil to domestic buyers or using it to settle debts owed to various institutions. This led to the formation of a network of oil intermediaries, often called the “trustee network,” where the state entrusted crude oil to individuals, companies, and institutions to sell on its behalf. The proceeds were intended to be transferred to the government’s treasury, with the sellers then recovering their agreed costs and outstanding claims. Some institutions handled sales directly, while others engaged private trading companies. Early recipients included the Oil Industry Pension Fund and Khatam al-Anbiya Construction Base, with even the municipal police receiving crude oil as payment.

Discrepancies between expected revenue and actual deposits into the government’s treasury emerged even in these early arrangements, contributing to significant economic corruption cases in Iran. These accounting issues and the government’s inability to recover funds from private sellers persisted until 2016, when the Joint Comprehensive Plan of Action (JCPOA) nuclear deal was signed, leading to the lifting of sanctions on Iranian oil sales. During this period, the government regained control over oil sales, and individuals who had failed to remit proceeds were prosecuted.

However, following the US withdrawal from the JCPOA in 2018 under President Donald Trump, Iran was compelled once again to rely on private oil traders. This reversion to intermediaries exacerbated the existing problems: delays in revenue return, accounting discrepancies, debts owed by sellers, and the seizure of Iranian oil shipments. The US also expanded sanctions to include entities and individuals involved in transactions with the Iranian government, shortening the time before traders and their assets were sanctioned and their accounts frozen.

This environment led to an accumulation of debts owed by sanctioned oil traders to the government and forced Iran to broaden its private oil-sales network. This expansion increased the number of participants, reduced individual allocations, and consequently heightened the risk of unreturned proceeds. Iranian officials have accused trustees of exploiting these sanctions workarounds for personal enrichment. The billions of dollars owed are a mix of outstanding payments, disputed financial obligations, and alleged corruption. While Iran’s judiciary chief has warned of legal action against non-compliant oil sellers, the underlying sanctions environment and the obstacles it creates continue to hinder the recovery of these funds.