Iran Economy NewsIran’s Regime Claims To Fill Global Energy Gap Despite...

Iran’s Regime Claims To Fill Global Energy Gap Despite Crippled Petroleum Sector


In recent weeks, the Iranian regime’s officials have been constantly exaggerating their huge capacity in oil and gas reserves and promising to provide energy to the world. The regime is desperately hoping to compensate for the shortage of gas and oil across the globe, which is due to the war in Ukraine.

According to the state-run Mardom Salari daily, Javad Oji, the regime’s oil minister, spoke during the 32nd meeting of OPEC+ last week, saying that the world needs the increase of the regime’s oil production, and they are ready to guarantee the energy security of the world.

The spokesperson of the regime’s Ministry of Foreign Affairs said that Iran, as one of the main countries owning oil and gas, has the capacity to cover some parts of the world’s oil and gas necessities. Some of the regime’s MPs have also repeated the same claims.

Despite having the second biggest gas resources in the world, the regime has never been able to find a proper place in the global gas market. This has many reasons. The main reason is the widespread corruption in the regime, which has effectively crippled the hydrocarbon industry.

One of the most famous cases of corruption in the country’s oil industry was the embezzlement of $7.4 billion. According to the regime’s state media, most of the defendants were chief executives of the regime’s petrochemical producers and exporters, which are all under the control of the Revolutionary Guards (IRGC).

The country has been struggling for many years to meet even its domestic fuel needs, let alone being able to secure the global energy shortage.

The optimization of gas consumption, both in power plants and factories and in the sources of consumption, was not taken very seriously and this greatly increased gas consumption in the country.

The balance of gas production and consumption in Iran has become almost negative, and last year’s gas cut in industries and factories was not applicable for domestic gas.

Another issue is that due to the decrease in investment in gas fields, because of the sanctions, and the drop in gas pressure in fields that are already developed but require new investment, the regime is actually facing a drop in its gas production.

In order to circumvent the sanctions, the regime has been smuggling oil and gas to neighboring countries for many years, mostly Iraq and Turkey, at a much lower value than the world-determined oil and gas price, which has caused large damage to the country.

False promises and over-optimism are nothing new in the regime, particularly where the regime’s oil industry is concerned. In 2020, the regime’s supreme leader Ali Khamenei and former president Hassan Rohani promised that they would replace the oil revenue with other sources and that the country would be able to withstand the sanctions. In general, the regime’s oil income has been compromising about 80 percent of its budget over the past forty years. Therefore, such a claim without the proper infrastructure is baseless.

According to the IMF, Iran is now producing about 1 million barrels of oil, while the regime’s officials, in the most optimistic view, have claimed that the regime will be able to produce 3.9 million barrels of oil per day. Of this, they would only be able to export 1.8 million barrels and use the rest for domestic consumption.

The amount of oil being churned out through Russian oil production was more than ten million barrels per day, which has decreased slightly during the sanctions against them. Still, Russia remains the largest oil producer in the world, along with the United States and Saudi Arabia. In comparison, Iran’s oil production and export capacity are still far below that of Russia, so there is no way they would be able to fill the gap in the world energy market.

At the same time, the regime is still struggling with an economic crisis. According to the World Bank report of April 2022, “Only a third of the pandemic-period jobs losses have so far been recovered. Oil revenue shortfalls led to a growing budget deficit, adding to inflationary pressures through the government’s deficit financing operations. Iran’s economic outlook is subject to significant risks.”

Also, a paper published by IMF researchers this month stated, “High and volatile inflation has been an endemic economic and social issue in Iran that has contributed to rising poverty and social tensions.”

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