Since the 1979 revolution, recurring rounds of sanctions and eight years of war with Iraq have hammered Iran’s oil production and export capacity. Despite boasting the fourth largest proven oil reserves in the world, Iran’s oil production and exports languished at 4 million barrels per day (mb/d) and 2.5 mb/d, respectively, in 2011.
The entrance of the European Union and United States into an even more stringent sanctions regime in 2012 further crippled an already hamstrung industry. Iran’s crude exports dropped 40 percent to 1.5 mb/d in 2012 and sunk to an average of just 1 mb/d by 2014 as foreign markets closed, international investment evaporated, and supply chains withered.
Now, as the Joint Comprehensive Plan of Action nuclear deal ushers Iran back into international energy markets, its oil and gas industry is poised to reach its full potential. The impacts promise to be profound and wide reaching as oil sales provided 80 percent of Iran’s export earnings and 60 percent of its state revenues in 2013. With Iranian oil production and exports already rising following the nuclear deal, this paper examines scenarios for Iran’s full reentry into international oil and gas markets.