Iran's crude oil production

In 2007, Iran produced more than 4 million barrels per day (bbl/d) of crude oil (about 5.4 percent of global output) and 1.0 percent of the world’s output of cement and fluorspar. Iran was also the fourth largest producer of natural gas in the world. The country exported 2.4 million bbl/d of oil, making it the world’s fourth largest exporter of oil after Saudi Arabia, Russia, and Norway. In 2003, steel, aluminum, and refined copper were minor but noteworthy exports for Iran. In 2007, 2.9 million metric tons of agricultural products were exported.

The Country

Slightly larger than the state of Alaska, Iran is a theocratic Islamic republic located in the Middle East. It is bordered by the Gulf of Oman, the Persian Gulf, the Caspian Sea, and the nations of Afghanistan, Armenia, Azerbaijan, Iraq, Pakistan, Turkey, and Turkmenistan. Iran’s terrain comprises a rugged, mountainous rim; a high, central basin with deserts; and small coastal plains. Iran had a gross domestic product (GDP) of $8.4 billion in 2008. Its economy was ranked seventeenth in the world by the International Monetary Fund in 2008, with a projected growth of 6.2 percent for 2009. The Central Bank of Iran (CBI) reported that for Iranian fiscal year 2007, industry contributed 45.3 percent and services contributed 43.7 percent to Iran’s GDP.

Politically, the 2009 presidential elections in Iran pointed to the social turmoil in that nation, as thousands demonstrated against a perception of corruption in the vote count. Iran is home to a population dominated by younger persons, many of whom did not experience prerevolutionary secular society under Mohammad Reza Shah Pahlavi, who was ousted in 1979. A study in contrasts—with an autocratic, oligarchic, fundamentalist government ruling over a sophisticated, talented populace, many of whose younger members (through access to cell phones, the Internet, and higher education) are more globally oriented than their parents and whose women are beginning to militate against social repression—Iranian society is in flux, and its economy and resources could be expected to come under the influence of these conditions.

Hydrocarbons

Oil, natural gas, and coal are composed of compounds containing both carbon and hydrogen—hence the term “hydrocarbons.” Iran’s hydrocarbon sector is overseen by its ministry of petroleum; the state-owned National Iranian Oil Company (NIOC) is responsible for oil and production and exploration. In 2007, accounted for 82 percent of Iran’s total exports, valued at $72.7 billion, an increase of more than 25 percent over 2006. Crude oil exports accounted for most of the hydrocarbon exports, and natural gas and refined made up the remainder. For most of 2008, Iran produced approximately 3.8 million bbl/d of crude oil. In March, 2009, Iran, along with other members of the Organization of Petroleum Exporting Countries (OPEC), cut its oil production quotas to bolster falling oil prices on the world market; Iran’s production quota was lowered to 3.6 million bbl/d. As of 2016, Iran was OPEC's third-largest producer of oil, after Saudi Arabia and Iraq, and was the fifth-largest in the world overall.

Production and distribution of natural gas and oil, and the refining of crude oil, accounted for 10 percent of Iran’s GDP. Of the hydrocarbon liquids produced by Iran, one-half of the crude oil was exported to China, India, and Japan; the remainder was consumed domestically. Most hydrocarbon-sector producers are required by Iranian law to satisfy domestic demand before exporting their output. As of 2009, Iran held proven oil totaling 136.2 billion barrels and natural gas reserves of nearly 29 trillion cubic meters, the third and second largest proven stocks in the world, respectively. In 2007, Iran’s production of natural gas totaled more than 111 trillion cubic meters, which equaled its domestic consumption.

Production of coal in Iran equaled domestic consumption, and there were no exports of coal in 2007-2008, although Iran planned to increase production of coal to 4.5 million metric tons in 2012 (up from 1.8 million metric tons in 2008). In 2006, primary energy production for Iran totaled 13.1 quadrillion British thermal units (Btu), while totaled 7.7 quadrillion Btu, the latter comprising natural gas (53 percent), oil (44 percent), hydroelectric (2 percent), and coal (1 percent). Natural gas accounts for one-half of Iran’s total domestic energy consumption; the other half is oil. Domestic demand for electricity was expected to grow by 7-9 percent.

Domestic demand for crude oil and natural gas is expected to increase, which may necessitate that Iran limit its hydrocarbon exports in order to meet domestic demand. Development of identified natural gas and oil resources was expected to continue, as was construction and renovation of oil refineries. These changes were subject to funding constraints and limitations imposed by the U.S. embargo on Iranian hydrocarbon goods and services because of Iran’s nuclear development program. According to the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), Americans may not trade, finance, or facilitate any goods, services, or technology to or from Iran that might benefit the Iranian oil industry. In 2009, U.S. president Barack Obama extended the U.S. sanctions against Iran for an additional year. A 2015 nuclear accord between the two countries removed the sanctions for several years, but President Donald Trump pulled out of the deal and reimposed the sanctions in 2018.

Crude Oil. While Iran produced 6 million bbl/d of crude oil in 1974, it has not been able to attain that level of production since the Islamic Revolution of 1979. The Iraq-Iran War (1980-1988), lack of foreign investors, economic sanctions, and the natural decline of mature oil fields have resulted in a production deficit of 400,000-700,000 bbl/d. In 2017, Iran’s oil exports reached 2.62 million bbl/d, with export revenues of $48 billion; in 2018 exports peaked at nearly 3 million bbl/d, but this number was expected to be halved after the sanctions. As of 2018, Iran had the fourth-largest oil reserves in the world, with the majority of crude oil reserves located in Khūzestān near the Iraqi border. In addition, Iran has an extensive domestic oil network, including five pipelines with many international projects under way. It has invested in its import capacity at the Caspian Sea port to handle increased product shipments from Russia and Azerbaijan and to enable crude oil swaps with its northern neighbors, Turkmenistan and Kazakhstan. Oil from the Caspian Sea in the north is consumed domestically, and an equal amount is produced for export through the Persian Gulf in the south. Iran has the largest oil tanker fleet in the Middle East.

Gasoline. Because Iran’s production of refined oil products is sparse, it has to import most of its gasoline, at great expense. In 2008, gasoline rationing decreased the need for imports by 40 percent, and gasoline consumption declined over the following several years, but in 2012 consumption began to rise again. In 2018, Iran consumed 520,000 bbl/d of gasoline. The opening of a new refinery, the Persian Gulf Star Refinery, that year was expected to decrease Iran's dependence on gasoline imports.

Natural Gas. Colorless and odorless, natural gas is a typical mix of hydrocarbon gases, 70-90 percent methane (CH₄). Unlike other fossil fuels, natural gas burns “clean,” emitting lower levels of greenhouse gases. Iran’s extensive system of pipelines transports refined natural gas to domestic and international destinations. In 2015, Iran produced 184.8 billion cubic meters of natural gas, more than double its annual production ten years before, but increases in consumption have kept pace with increases in production—Iran consumed 186 billion cubic meters that year. Despite Iran’s plans to expand production of its most important energy project, the offshore South Pars natural gas field in the Persian Gulf, increasing domestic demand keeps natural gas exports at a minimum. Therefore, most of the South Pars output will be used to meet domestic needs and for production of liquefied natural gas (LNG), which is easier to transport and store than regular natural gas. Iran’s LNG projects are second only to those of neighboring Qatar, with exports possibly reaching 1,462 billion cubic feet (Bcf). Even with the threat of economic sanctions by the United Nations, Iran had three LNG plants and gas pipelines to Armenia, Europe, Kuwait, and the United Arab Emirates either in the planning stage or under construction.

Mining and Metals

Iran’s Ministry of Industries and Mines oversees all mining, smelting, and refining industries, excepting the oil and gas sectors. In the 1970’s, the Iran Geological Society began surveys to assess the value of Iranian mineral deposits and uncovered substantial reserves of iron ore, deposits of uranium, and other minerals in 1986. While most of Iran’s active mines are privately owned, the government controls many of the larger commodity enterprises, especially those that produce aluminum, ammonia, coal, iron, and steel. In 2007, the Iranian government privatized a considerable percentage of its equity interests in enterprises that produce copper, steel, and aluminum. However, international funding for development of such projects was put aside because of the threat of U.N. sanctions related to Iran’s nuclear development program, including the nuclear-fueled, electricity-generating reactor at Būshehr in western Iran.

In 2009, Iranian president Mahmoud Ahmadinejad inaugurated Iran’s first nuclear fuel plan, while iterating the country’s stance that its nuclear endeavors were solely for civilian purposes. That same year, Iran launched a rocket with a capability of reaching nearby countries. Iran has ample supplies of both uranium and fluorspar. Also in 2009, the International Atomic Energy Agency (IAEA) reported that Iran had increased its production of low-grade enriched uranium, raising its stockpile to 1,339 kilograms.

Copper (Cu), atomic number 29, is found mostly as ores of oxygen (O), iron (Fe), and sulfur (S). Copper’s physical properties, abundance, and availability through low-cost bulk mining make the mineral a valued Iranian commodity. However, while Iranian copper deposits are among the world’s largest, with reserves in Kermān Province in southeastern Iran, Iran is not one of the world’s leading producers. Prior to the Iranian Revolution of 1979, Iran had planned to develop the copper industry in order to replace oil as a source of foreign exchange. However, the Iraq-Iran War and slumping copper prices discouraged development of the sector. Nonetheless, the Iranian government continued to promote private sector investment, which may have added to Iran’s copper output in the 1980’s. Iranian production of copper concentrate grew by 62.5 percent from 2002 to 2007. In 2007, the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) announced that Iran’s copper mining industry had been mostly privatized, with output for the year standing at 200,000 metric tons. Iran produced 306,100 metric tons of copper in 2015 and 288,000 metric tons of copper concentrate.

Iron (Fe), atomic number 26, is a highly reactive, metallic that oxidizes readily. Principle iron ores include hematite (70 percent iron), magnetite (72 percent iron), and taconite, which contains both magnetite and hematite. Chromite (ferrous chromic oxide, FeCr₂O₄), which also contains iron, is the only known of chromium, atomic number 24. Both iron ore and chromite are plentiful global resources. Iran has total chromite reserves of 18 to 27 million metric tons. Chromite production has been on a downward trend in the twenty-first century, decreasing from 189,200 metric tons in 2011 to 160,000 in 2015. Iron ore production, meanwhile, has been rising, going from 17.6 million metric tons in 2011 to 19.3 million in 2015.

Agriculture

Beginning in 1979 commercial farming replaced subsistence farming as the major source of agricultural production. In 1997, the gross value of products in Iran’s agricultural industry was an estimated $25 billion, and in 2003, almost 25 percent of Iran’s exports (excluding oil and petrochemicals) were related to agricultural products and services. According to the CBI, Iran’s exports of agricultural products had a total value of $3.2 billion in 2007. About 20 percent of Iran’s land is arable, and one-third of Iran’s arable land is irrigated via reservoirs and dams alongside rivers in the Alborz and Zagros mountains.

As of 2009, there were twenty-two thousand Iranian “food industries units.” Iran’s main food-producing areas are found near the Caspian Sea and the valleys of northwest Iran. Major agricultural exports include fruits (fresh and dried), spices, nuts, and processed food; fruits and nuts accounted for 2 percent of Iran’s exports in 2008. Iran is the world’s largest producer of saffron and pistachio nuts. Iran’s livestock products include lamb, goat meat, beef, poultry and eggs, and dairy as well as wool and leather.

According to the CBI, Iran’s agriculture sector (excluding wheat) greatly improved in 2008. Agricultural production totaled 98 million metric tons, 20 percent higher than in 2007, employing 33.3 percent of the labor force. Over a three-year period ending in 2007, the agricultural, horticultural, and livestock-processing sectors showed increasingly positive gains despite a severe drought in Iran throughout 2007. The value added in the agriculture sector increased to 6.2 percent, 1.5 percent higher than in 2006. During the same period, total agricultural and horticultural production reached 81.6 million metric tons, a 3.6 percent rise, while livestock, poultry, and dairy output increased by 7 percent. Livestock production increased to 10.2 million metric tons during 2007. While agricultural programs aimed at modernization have raised the production levels, problems remain; these include poor conditions, outdated equipment and farming techniques, and shortages of viable seed and water. Moreover, the combined burdens of government subsidies and price controls in the food sector remain burdensome to Iran’s economy.

Wheat,Iran’s most important crop, is grown mainly in the western and northwestern regions of the country. From 1999 to 2004, wheat imports in the Middle East began to contract, especially in Iran. In 2007, Iran was self-sufficient in wheat production and became a net exporter of wheat for the first time. However, this gain was short-lived after poor weather conditions in the second half of 2008 damaged Iran’s wheat crop, resulting in the need to import a minimum of 1.8 million metric tons of wheat, increasing Iran’s budget deficit. Acording to the U.N. Food and Agriculture Organization (FAO), Iran had to lower its wheat production forecasts from (13.6 to 11) metric tons and significantly reduce its wheat exports. In the past, Kazakhstan was able to meet Iran’s demand for wheat, but it too had problems with its wheat crop in 2008, and Iran had to rely on wheat exporters such as the European Union, Canada, Australia, and the United States. Despite U.S. trade sanctions, in early 2009, Iran spent $96 million on imports from the United States—including wheat, soybeans, and medical supplies. Previously, rice, the major crop cultivated in the Caspian Sea region, did not meet domestic needs and resulted in substantial imports. In 2008, Iran imported 19 percent of its foodstuffs and other consumer goods.

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