Abstract
Iran is the world’s fourth largest holder of oil reserves, and the costs of producing Iranian oil are relatively low. The dynamics of oil production has a pronounced cyclical character, and these cycles are set by political factors exogenous for the oil sector. The peak was reached in 1974, and since then Iran’s share in world oil production has declined. The authors show that, in a series of powerful exogenous shocks, unilateral and multilateral sanctions have had a strong negative impact on the dynamics of Iranian oil production. The long-term negative effects of the sanctions significantly outweigh the short-term ones. Crucially, owing to the sanctions, the technological level of the Iranian oil sector remains extremely low. Global energy companies and banks refuse to cooperate with Iranian counterparties because the expanding practice of extraterritorial application of US sanctions has turned Iranian hydrocarbons into a “toxic asset.” The countries of the Asia‒Pacific region that continue to import Iranian oil under the sanctions have become able to establish favorable terms of contracts. Iranian oil is purchased at a price discount for restricted and/or nonconvertible currencies, often in exchange for counterbarter deliveries of goods. With the accelerating race to monetize hydrocarbon reserves and the approaching global peak in oil demand, it is more likely that a significant portion of commercially competitive Iranian oil will remain in the ground.
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Translated by B. Alekseev
Stanislav Vyacheslavovich Zhukov, Dr. Sci. (Econ.), is Deputy Director for Research at the Primakov National Research Institute of the World Economy and International Relations (IMEMO), RAS. Oksana Beniaminovna Reznikova, Cand. Sci. (Hist.), is a Senior Researcher at the IMEMO Center for Energy Research, RAS.
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Zhukov, S.V., Reznikova, O.B. Iran in the Global Oil Market. Her. Russ. Acad. Sci. 90, 708–717 (2020). https://doi.org/10.1134/S1019331620060106
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DOI: https://doi.org/10.1134/S1019331620060106