Iran’s oil exports dropping sharply
WASHINGTON – Iran is suffering a staggering decline in revenue from its oil exports, and if the trend continues income could virtually disappear by 2015, according to an analysis published Monday in a journal of the National Academy of Sciences.
Iran’s economic woes could make the country unstable and vulnerable, with its oil industry crippled, Roger Stern, an economic geographer at Johns Hopkins University, said in the report and in an interview.
Iran earns about $50 billion a year in oil exports. The decline is estimated at 10 to 12 percent annually. In less than five years exports could be halved and then disappear by 2015, Stern predicted.
For two decades, the United States has deployed military forces in the region in a strategy to pre-empt emergence of a regional superpower.
The U.S. military exercises have not stopped Iran’s drive. But the report says the country could be destabilized by declining oil exports, hostility to foreign investment to develop new oil resources and poor state planning. Stern’s analysis, which appears in this week’s edition of the Proceedings of the National Academy of Sciences, supports U.S. and European suspicions that Iran is trying to develop nuclear weapons in violation of international understandings. But, Stern says, there could be merit to Iran’s assertion that it needs nuclear power for civilian purposes “as badly as it claims.”
The U.N. Security Council adopted a resolution Saturday imposing limited sanctions on Iran for its refusal to cease uranium enrichment. Enriched uranium, which Iran insists on producing, can be used as fuel for nuclear reactors or as material for atomic weapons.
Stern said oil production is declining and both gas and oil are being sold domestically at highly subsidized rates. At the same time, Iran is neglecting to reinvest in its oil production.
“With an explosive demand at home and poor management, the appeal of nuclear power, financed by Russia, could fill a real need for production of more electricity,” he said.
Iran produces about 3.7 million barrels a day, about 300,000 barrels below the quota set for Iran by the oil cartel, the Organization of Petroleum Exporting Countries.
The shortfall represents a loss of about $5.5 billion a year, Stern said. In 2004, Iran’s oil profits were 65 percent of the government’s revenues.
If the United States can “hold its breath” for a few years it may find Iran a much more conciliatory country, he said. And that, Stern said, is good reason to belay any instinct to take on Iran militarily.