IRAN HAS SOME OF THE LARGEST OIL AND NATURAL GAS RESERVES ON THE PLANET
- THIS MEANS IRAN HAS A TOP POSITION IN GLOBAL ENERGY MARKETS AND IN ENERGY TRADE
- THROUGH ITS PRODUCTION OF OIL AND NATURAL GAS IRAN CAN EXERT CONSIDERABLE INFLUENCE ON GLOBAL OIL AND GAS MARKETS
- IRAN CAN SWAY MARKET PRICES GLOBALLY BY ADJUSTING PRODUCTION
1. Iran uses its oil and gas reserves to assume a leading role in the global energy business.
Iran is another important energy hub in the Middle East, as is Saudi Arabia – Iran is also seeking greater influence over energy markets in the Middle East and in oil importing regions of the world. Both countries are independent in terms of energy policy and are strategically located in the Middle East at the crossroads of major energy trade routes.
On a deeper level, Saudi Arabia and Iran are both vying for influence. Both countries have enormous energy reserves, which they can use to gain more weight in global energy trade. This way they can leverage greater influence on global energy markets and move prices. In energy-terms, Iraq is of great interest, another oil- and gas-rich country in the Greater Middle East.
Both Iran and Qatar tap into the abundant under-water oil and gas reserves in the Gulf. Qatar considered making changes to its relationship with OPEC, eventually leaving OPEC. This has many reasons. As a country on the Gulf, Iran takes an interest in Qatar’s development. As I mentioned in a previous article, Qatar sees itself as a mediator. One must also keep in mind that due to the enormous natural gas reserves Qatar is an interesting international partner for energy importing countries.
2. Iran has rich oil and gas reserves and influences global energy markets.
Iran can exert a significant degree of influence on global energy trade due to its large oil and natural gas reserves. It must be kept in mind that Saudi Arabia, unlike Iran, is an energy hub between the Red Sea with access to the Indian Ocean, the Gulf Region and the Persian Gulf. Saudi Arabia relies on maritime trade to transport its oil exports across straits and belts to distant locations to generate the necessary national income for Saudi Arabia.
Although Iran relies on international cooperation, its overall dependence on global commodity markets is less pronounced than one might expect given its strategic energy reserves and ability to export oil through Central Asia. However, we must not forget that Iran’s net energy consumption is increasing, as is the net energy consumption of other Gulf states such as Saudi Arabia.
Iran needs an ever-increasing share of total energy consumption to ensure that its own population has enough cheap energy for consumption. Due to high inflation in Iran, energy and fuel are heavily subsidized. In some ways, parts of the energy system are characterized by inefficiency. Iran may need to increase spending on technical infrastructure.
3. Iran’s energy future also depends on sanctions.
Iran has had to endure sanctions for a long time. As far as energy matters are concerned, Iran had to find new ways and new partners willing to buy Iran’s oil and gas production, especially China. Energy policy coordination of the Chinese, Russian and Iranians has the potential to sway global oil and gas markets in a certain direction. Through its oil and natural gas reserves, Iran can influence the state of the global economy, as well as economic upturns and downturns.
In a previous article, we provided an overview of the historical context of energy markets in the Middle East and Gulf region.