Iran may have had a political boost from the Arab Spring in North Africa and the Middle East — with some new regimes apparently more sympathetic toward Tehran while others brace themselves against the Iranian regime’s influence among opposition movements in the region. But there is no attendant economic windfall to all the change. Indeed, the Islamic Republic, the second largest oil producer in OPEC, has come to be very concerned about petroleum.
Iranian oil ministry officials are worried that Tehran’s clout will actually weaken in OPEC, which as a group decides on each member’s maximum amount of oil output. Current gulf rival Saudi Arabia is the heaviest hitter in the cartel; meanwhile, old rival Iraq has started to ramp up oil production. “When you talk to people internally, there is fear,” says a veteran Tehran-based analyst who advises the government. “Now that Iraq has announced its expanded reserves, there is serious concern that our standing in OPEC has been damaged.” That comes on news that Iran last year either lost or suffered reductions in contracts with many longtime business partners and traditional purchasers of its oil.
Iran has counted on the shortage of Iraqi oil production as a buffer against potential sanctions on purchases of Iranian crude, says the Tehran-based analyst. Although Iraq is currently excluded from the organization’s quota system, Iranian oil officials admit they are worried the resurgence of its historical rival will affect Tehran’s standing within OPEC.
