Amid the continuing stalemate over Iran’s nuclear program, various narratives have emerged about the sanctions and their impact. The dominant one in Western policy circles and mainstream media is that the sanctions are making Iran crack. This reinforces the view that time is on the side of the Western members of the P5+1 and that concessions Iran deems necessary for progress on the nuclear issue shouldn’t be on the table.

However, a sound understanding of the sanctions’ impact on Iran’s behavior is only possible if the actual situation in Tehran is properly assessed.

To be clear, sanctions have roughly halved Iranian oil exports. Tehran sells around 1 million barrels a day of crude, down from the IEA’s 2.3 mbpd estimate for 2011. How has this impacted Iran’s finances?

The government’s budget for FY 2012/2013 is set at $113 billion, including an allocation of $49 billion in oil revenues. With Brent on course to average $111 a barrel this year, a conservative estimate of average Iranian crude sales of 1.1 million barrels a day suggests Iranian oil revenues of about $45 billion in 2012. To put things into perspective, Iran earned roughly half as much in the beginning of this millenium, when Mohammad Khatami was president.