The Oil and Gas Industry
- The Iranian economy is heavily dependent on the lucrative oil and gas sector. But the vagueries of the oil markets and Iran’s reliance on a single resource for most of its income has created disincentives to develop a more diversified and globally integrated economy. Consequently, the sector has been a source of periodic but persistent economic instablity.
- Iran’s oil and gas sectors have critical structural problems. Subsidized prices and a population that has doubled sinec the 1979 revolution has created excessive demand. Supply has been stymied by underinvestment caused by financial constraints, technical shortages and sanctions. Iran is a net importer of gas and is under pressure to avoid becoming a net importer of oil.
- The government of President Mahmoud Ahmadinejad has asserted its control over the oil and gas sector. It has reduced the power of the “oil mafia,” dominated by allies of former President Akbar Hashemi Rafsanjani, and replaced it with companies associated with the Revolutionary Guards.
- International sanctions will slow investment in the oil and gas sector in the next few years, which could lead to a decline in output.
- A sharply lower oil price would destabilize the Iranian economy, since Iran balances its external accounts around $75 per barrel.
- Falling oil and gas output and lower oil prices will weaken the government’s ability to stimulate the economy, which could result in slower economic growth and higher unemployment.
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"The Iran Primer"--Book Overview
The world’s most comprehensive website on Iran, “The Primer” brings together 50 experts—Western and Iranian—in concise chapters on politics, economy, military, foreign policy, and the nuclear program. It chronicles events under six U.S. presidents. It also has leader bios, timelines, data on nuclear sites—and context for what lies ahead. Click here for a hardcopy. New articles are added at the top.