Since 2010, the NIOC has experienced a decline in oil export sales and so been forced to store more unsold oil than the country's typical seasonal storage levels, according to oil ministry officials. Meanwhile, heightened international enforcement of financial sanctions against the Islamic Republic have constrained the NIOC's access to company earnings from oil sales overseas.
Since oil export revenues are Iran's primary source of foreign exchange, monetary policy makers inside the Islamic Republic's Central Bank are finding it increasingly difficult to facilitate foreign currency transactions and regulate the depreciation of Iran's currency, say local financial advisors and economists.
“Not only do they get less oil income," says an Iran analyst, speaking from Tehran on condition of anonymity, "but their ability to manage the exchange rate gets constrained as well.”
To manage the decline in oil sales and eliminate any unsold oil stored offshore, Iran has reduced daily oil production and offered discounts to foreign customers, who as a result of US and international sanctions must pay higher transaction fees and deal with a lengthier bureaucracy to buy Iranian oil, says a senior Iranian oil official.
“If we're sensitive about price, then oil stocks will rise again,” the official said. “We just want to sell.”
Iran hasn't released an official estimate of its foreign currency reserves since 2008, when the figure stood at just over $80 billion. Anecdotal evidence suggests that number has fallen by 35 percent to around $54 billion, according to interviews with local economists.