Iran’s Sweeping International Energy Policy


MARKET INSIGHT:


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

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 Greater Middle East, just like Saudi Arabia- Iran is also vying for more political influence in the Middle East. In energy terms, both countries are energy independent and strategically-positioned in the Greater Middle East along the crossings of major energy trade routes. Iran continues to have with the United States and Great Britain certain historical entanglements.


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. That 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.


Through various international collaborations is exerting more and more influence on global energy markets.


Iran has considerable sway in Iraq and Qatar. As such, Iran may leverage considerable influence on global energy trade. Saudi Arabia maintains a close military and energy policy relationship with the United States that has lasted for over 60 years, in which Saudi Arabia sells its production volumes in US dollars in energy markets. And in that sense, the relationship between the U.S. and Saudi Arabia might be considered a central element which lays out the frame of conduct in the Middle East.

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This is precisely the significance of Saudi Arabia in geopolitical terms. It must always be considered that Saudi Arabia, in contrast to Iran, is a node of trade between the Red Sea with access to the Indian Ocean, and the Gulf region. Saudi Arabia requires maritime trade to ensure that its oil exports are being transported across straits and belts, to far flung locales. and thus generate the necessary national income for Saudi Arabia.


Although Iran is dependent on international cooperation, Iran’s overall dependence on global commodity markets is less pronounced then most other countries of a similar size, due to its strategic energy reserves. But we have to keep in mind that Iran’s net energy consumption is on the up, as is the net energy consumption of other Gulf countries like Saudi Arabia.


Iran needs an ever larger portion of the total energy consumption to ensure that its own population has enough cheap energy available for consumption. Due to Iran’s economic weakness, energy and fuel are heavily subsidized. In some sense, the entire energy system is characterized by inefficiencies that are very difficult to eliminate. Iran might need to increase expenditure on technical infrastructure.


Iran’s energy future also depends on the way Western sanctions are enforced and on Iran’s civilian use of nuclear power.


Iran has had to endure Western 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 sate of the global economy, as well as economic upturns and downturns.


Many thanks for the shared interest in the energy world!



Disclaimer:


This article is just meant to inform the reader of recent developments in the energy industry at large and to share knowledge and insights with a wider audience. The author does not put forth investment recommendations.

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You are welcome to take a look at

The Energy World in Pictures 2020.


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boegelsackenergy@outlook.com