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Iran: Oil and Gas Industry
Country Study > Chapter 3 > The Economy > Petroleum Industry > Oil and Gas Industry

OIL AND GAS INDUSTRY


Petroleum has been the main industry in Iran since the 1920s. Iran was the world's fourth largest producer of crude oil and the second largest exporter of petroleum at the peak of its oil industry in the mid-1970s. The war with Iraq cut Iran's production in the 1980s, although Iranian oil reserves remained the fourth largest in the world.

Nationalization of the oil industry in 1951 resulted in temporary political and financial chaos. Production did not resume until late 1954 led to a policy of increased economic and political cooperation between Iran and states outside the Soviet sphere of influence. In 1961 Iran joined with other major oil-exporting countries to form OPEC, whose members acted in concert to increase each country's control over its own production and to maximize its revenues.

When Iran's economy worsened after the outbreak of war with Iraq, its willingness to abide by OPEC guidelines decreased. From 1983 to 1984, OPEC priced oil at US$29 per barrel, but Iran undercut OPEC prices at US$28 per barrel through October 1984 and subsequently reduced it even further to US$26.50 per barrel. Iran continued deliberate undercutting until the pricing crisis in July 1986, when prices dropped below US$10 per barrel and the oil-exporting countries met to reach agreement on both price and production levels. The thirteen members of OPEC, and several non-OPEC countries, agreed in December 1986 to a price of US$18 per barrel, with a maximum differential of US$2.65 between light and heavy crude oil. (Light crude is the source of products such as gasoline and is more expensive, whereas heavy crude provides the components used in products such as residual fuel, oil coke, and waxes.) By January 1987, as a result of war damage and government conservation policies, crude production averaged 2.2 million bpd, about 100,000 bpd below Iran's OPEC quota.

Data as of December 1987




Last Updated: December 1987


Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Iran was first published in 1987. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on Factba.se.

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