In the darkened corridors of power that define the Islamic Republic of Iran, there is one institution that looms larger than any other: The Islamic Revolutionary Guard Corps (IRGC). What began in 1979 as an ideologically driven force to protect the Islamic revolution has since evolved into the country’s most powerful military, economic, and political entity.

Today, the IRGC’s fingerprints are on everything that emanates from Iran, from nuclear enrichment to regional proxy wars. However, it is the organization’s reach into Iran’s oil industry that has proven the most lucrative.
This is not just a case of military overreach. It is the systematic conversion of a national resource into a war chest for militarism and repression – part of the kleptocracy that controls Iran. The IRGC has transformed itself into a parallel state, with its own economy, ideology, and global ambitions all supported by Supreme Leader Ayatollah Ali Khamenei and fueled by oil that rightly belongs to the Iranian people but is used to help finance their subjugation.
Details of Iran’s new budget bill, which came into effect on March 21 after Nowruz (the Persian New Year), were released by the Iranian government last week, and they underscore both the disproportionate allocation of oil revenues and national budget to Iran’s military and security apparatus and the transfer of state-owned assets into their control.
Under the guise of “strengthening national defense,” the IRGC has been entitled to a share of Iranian oil profits. This year marks a significant increase, along with government authorization that crude oil deliveries be expanded to additional projects, such as Iran’s nuclear program. Experts estimate that up to 50% of Iranian oil exports are now controlled by the Revolutionary Guards.
Iranian flag with stock graph and an oil pump jack miniature model are seen in this illustration taken October 9, 2023. (credit: DADO RUVIC/ILLUSTRATION/FILE PHOTO/REUTERS)
Iranian flag with stock graph and an oil pump jack miniature model are seen in this illustration taken October 9, 2023. (credit: DADO RUVIC/ILLUSTRATION/FILE PHOTO/REUTERS)
Furthermore, the budget law indicates that the government has allowed IRGC-affiliated institutions, such as the Khatam al-Anbiya Construction Headquarters – the IRGC’s engineering and construction conglomerate – to settle government debts through the transfer of state assets.
According to estimates, Iranian President Masoud Pezeshkian’s government has planned daily oil exports of 1.85 million barrels through 2025. One-third of this amount, valued at $12.4 billion, will be directly allocated to the armed forces and their special military projects – a figure three times higher than in 2024.
The remaining exported oil (along with all exported gas) will be shared among the government budget, the National Development Fund, and the National Iranian Oil Company, totaling $33.5b.
Another crucial detail in the new budget is that the government has fixed the exchange rate for oil allocated to the armed forces at approximately 600,000 rials per euro, even though the euro’s actual market value hovers around 1.14 million rials.
This significant gap allows the military to profit heavily by selling the oil and exchanging the earnings at the much higher market rate, essentially pocketing the margin as a hidden subsidy. This is all a part of the Iranian kleptocracy.

Revolutionary economics

The IRGC’s economic expansion traces back to the aftermath of the Iran-Iraq War in the late 1980s when then-supreme leader Ayatollah Ruhollah  Khomeini tasked the Guards with helping rebuild the war-torn country. That mission led to the founding of Khatam al-Anbiya. In the years that followed, the IRGC gained control of massive infrastructure projects, ports, telecom contracts, and, eventually, oil and gas fields.
By the 2000s, under president Mahmoud Ahmadinejad, the group’s role was turbocharged. Dozens of oil and gas contracts were handed to IRGC-linked companies without competitive bidding. As sanctions mounted in response to Iran’s nuclear program, the regime leaned on the IRGC not only to build domestic resilience but also to circumvent global financial restrictions.

Sanctions did not seem to weaken the IRGC. Instead, they empowered it.

That consolidation only accelerated during crises. In December 2024, Iran experienced one of its worst oil revenue slumps in recent years. Global oil prices dipped, Chinese purchases declined, and logistical bottlenecks – many caused by sanctions on shipping and insurance – severely impacted Tehran’s ability to get its crude to market.

But the IRGC, with its global network of smuggling routes and sanctioned-friendly intermediaries, stepped in. The IRGC now controls the majority of Iran’s oil exports. Its operatives bypass sanctions by utilizing “dark fleet” tankers, falsified documentation, and ship-to-ship transfers in international waters. The profits, rather than bolstering Iran’s formal economy or reaching the central bank, are diverted to the IRGC’s vast military-industrial complex.
Tehran’s solution to the downturn? Not reform, not diversification. Instead, the 2025 budget proposed a further shift of state assets, including oil-related holdings, into the IRGC’s hands. The move was cloaked in revolutionary rhetoric but widely understood for what it was: a bailout for the regime’s true power center.

China

One of the IRGC’s most critical lifelines is China. Despite international sanctions, Beijing continues to import hundreds of thousands of barrels of Iranian crude per day – often disguised as originating from Malaysia or Oman. Analysts estimate that up to 80% of Iran’s oil exports now go to China, many routed through IRGC-linked shell companies.
In February, the US Treasury sanctioned the international network that facilitated the shipment of millions of barrels of Iranian crude oil worth hundreds of millions of dollars to China.
“The oil was shipped on behalf of Iran’s Armed Forces General Staff and its sanctioned front company, Sepehr Energy Jahan Nama Pars (Sepehr Energy). This action includes entities and individuals in multiple jurisdictions, including the PRC [People’s Republic of China], India, and the United Arab Emirates, as well as several vessels,” the Treasury said.
“The Iranian regime remains focused on leveraging its oil revenues to fund the development of its nuclear program, to produce its deadly ballistic missiles and unmanned aerial vehicles, and to support its regional terrorist proxy groups,” said Secretary of the Treasury Scott Bessent at the time. “The United States is committed to aggressively targeting any attempt by Iran to secure funding for these malign activities.”

IRGC’s special arrangement

This arrangement has allowed the IRGC to act independently of Iran’s formal budgetary process, creating what economists have called a “black economy,” where a state-run terror group profits from the nation’s wealth while evading any semblance of accountability.
Iran is no longer governed by a revolutionary ideology; it is governed by a kleptocratic elite that uses the IRGC as both sword and shield. The IRGC doesn’t serve the state anymore or protect the revolution. It is the state. And its survival depends on siphoning off Iran’s wealth to maintain power through repression at home and terror abroad.
This kleptocracy isn’t abstract. It is visible in the empty shelves of Iranian grocery stores, in the decaying hospitals, in the pockets of teachers who haven’t been paid, and in the lavish villas of IRGC commanders who shuttle between Tehran, Damascus, and Beirut, while the nation’s youth worry about food, jobs, and freedom.
Where does the money go? Some of it funds domestic repression, including the surveillance state, the Basij paramilitary force, and the imprisonment of dissidents. But most of it fuels Iran’s regional ambitions.
The IRGC’s Quds Force has financed Hezbollah in Lebanon for decades, the Houthis in Yemen, Shi’ite militias in Iraq, and Hamas in Gaza. Some $50b. of Iranian wealth was handed to Syria’s president Bashar al-Assad instead of enriching the lives of Iran’s citizens. Iranian missile factories dot Syria and Lebanon. Its drone technology now shapes conflicts from Ukraine to Sudan.
The West has continued to sanction dozens of IRGC-linked entities, including front companies involved in oil smuggling. Yet the IRGC continues to adapt.
As the US Treasury warned in a recent statement: “Iran generates the equivalent of billions of dollars each year via oil sales to fund its destabilizing regional activities and support of multiple regional terrorist groups, including Hamas, the Houthis, and Hezbollah. The [Iranian armed forces] utilizes networks of foreign-based front companies and brokers to enable these oil sales and shipments.”

A nation held hostage

The Islamic Republic and Khamenei like to claim regularly that they stand tall against Western imperialism. In truth, the regime has surrendered its economy and its people to a militarized oligarchy. The IRGC’s control over Iran’s oil industry is not just an economic fact; it is a political verdict on the regime’s direction.
What was once a revolutionary guard has become an empire. What was once a republic has become a mafia-like racket.
The people of Iran suffer daily under economic hardships while the IRGC continues to enrich itself and lead the people not to revolution but to more suffering.