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Global benchmark crude was trading around $62 a barrel in late 2019. Iran needs it to fetch upward of $196 to balance its budget next year, according to the International Monetary Fund (IMF).

Iranian President Hassan Rouhani on 10 November 2019 said a new oil field was discovered in the Khuzestan province. He said the new field has more than 50 billion barrels of crude oil, which would boost the country's proven reserves by a third. "I am telling the White House that in the days when you sanctioned the sale of Iranian oil, the country's workers and engineers were able to discover 53 billion barrels of oil," Rouhani said. "This is a small gift by the government to the people of Iran." The field could become Iran's second-largest oil field, behind Ahvaz with 65 billion barrels of crude.

After the 2015 nuclear agreement, Iran boosted its oil exports to a level above two million barrels per day (bpd), but by July 2019 some estimates put the figure as less than 400,000 barrels per day. This meant by one estimate Iran was losing around $25 billion a year, which is a significant setback for its oil-fueled economy and government budget. On 10 July 2019 the US special representative for Iran, Brian Hook, told Al Arabiya that imposed oil sanctions on Iran alone will deny the regime $50 billion in revenue annually, adding that the pressure is going to continue. The oil sanctions alone are going to deny the Iranian regime 50 billion dollars in revenue annually. We've also sanctioned the petrol chemical sector, their industrial metals, their precious metals, said Hook, adding that pressure is going to continue. This is not sustainable for the Iranian regime. In August 2019, US Secretary of State Mike Pompeo said sanctions had managed to take almost 2.7 million barrels a day of Iranian crude off the market, costing Tehran billions in lost revenue.

Iran exported 2.1 million barrels per day (bpd) of oil in August 2018, but analysts said US sanctions could reduce sales to around 1 million bpd. Since the ban on the purchase of Iranian oil by the United States in May 2019, it was reported that millions of barrels of Iranian oil continued to flow into bonded storage tanks in Chinese ports for possible future use. The logic behind what is referred to as bonded storage is that such supplies do not cross Chinese customs or show up in the nations data of imports meaning that it is still owned by Iran since it is still in transit and in speculative contemplation.

Washington imposed sanctions on a Chinese company for transporting Iranian oil, a move that violated US sanctions. US Secretary of State Mike Pompeo said on 22 July 2019 that Chinese company Zhuhai Zhenrong and one of its executives knowingly violated US sanctions banning the import of Iranian oil. Among other things, the imposition of these sanctions blocks all property and interests in property of Zhuhai Zhenrong Company Limited that are in the United States or within the possession or control of a U.S. person, and provides that such property and interests in property may not be transferred, paid, exported, withdrawn, or otherwise dealt in. Additionally, the United States is imposing several restrictions as well as a ban on entry into the United States on Youmin Li, a corporate officer and principal executive officer of Zhuhai Zhenrong Company Limited.

Data provided 28 July 2019 by China's customs authorities shows the country has largely defied US sanctions on Iran by continuing to import oil from the country even after Washington ended exemptions given to Beijing for buying Iran's crude in May. Data published by China's General Administration of Customs showed that the country had imported some 208,205 barrels per day (bpd) of Iran's oil in June. That came as Beijing was supposed to cut its crude imports from Iran to zero as demanded by a series of illegal sanctions imposed by the United States which seeks to force Iran into new concessions over its nuclear and missile programs.

As Iran has lost market share in China, Saudi Arabia has taken over the Irans lost oil sales. In June 2019 Riyadh boosted its exports to China by 84 percent to a total of 1.88 million barrels a day, instead of 1.1 million in May 2019. Russia has also increased exports to China by 45 percent in June compared to the volume in June 2018.

The Trump administration on 22 April 2019 told five countries - Japan, South Korea, Turkey, China and India - that they would no longer be exempt from US sanctions if they continued to import oil from Iran after their waivers ended on May 2. "We're going to zero. We're going to zero across the board," US Secretary of State Mike Pompeo told reporters after the White House made the announcement in a statement. "There are no (oil) waivers that extend beyond that period, full stop," he said, adding that there would be no grace period for those economies to comply.

The United States, engaged in a maximum pressure campaign against Tehran since Donald Trump came to office, had been giving the countries time to wean themselves off Iranian oil, but has decided that waivers would no longer be issued. "The goal remains simply: To deprive the outlaw regime of the funds that it has used to destabilise the Middle East for decades and incentivise Iran to behave like a normal country," Pompeo said.

The US administration granted eight oil-sanctions waivers when it reimposed sanctions on Iran after Trump pulled the US out of the landmark 2015 nuclear deal. The waivers were granted in part to give those countries more time to find alternate energy sources but also to prevent a shock to global oil markets from the sudden removal of Iranian crude. Since November 2018, three of the eight countries receiving waivers - Italy, Greece and Taiwan - had stopped importing oil from Iran. The other five, however, had not, and lobbied for their waivers to be extended.

In April 2019, Iranian exports were averaging below one million barrels per day (bpd). That was lower than at least 1.1 million bpd estimated for March, and down from more than 2.5 million bpd before the renewed sanctions were announced in May 2018.

Iranian President Hassan Rouhani said 17 January 2016 the Islamic republic had entered a "new chapter" in its history in a speech praising the end of international sanctions imposed over Iran's nuclear activities. Tehran's hopes of an instant windfall by its return to the global oil markets will likely be tempered due to the massive glut of oil, which dropped to $30 per barrel in Janaury 2016 for the first time in a decade.

Despite oil prices falling below $30, Iran intends to increase production after the nuclear deal. The country was expected to increase its daily export of 1.1 million barrels of crude oil by 500,000 shortly, and a further 500,000 in the longer run.

Petroleum had 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 following the end of hostilities in 1989.

Nationalization of the oil industry in 1951 resulted in temporary political and financial chaos. Production did not resume until late 1954. As part of the nationalization process, the government formed the National Iranian Oil Company (NIOC). As owner, the government directed NIOC policy. As a result of the Consortium Agreement reached in 1954 between the government and a consortium of foreign oil companies, industry control of the oil companies was left virtually intact, but the agreement greatly increased the government's share of income from each barrel of oil produced. The combination of the larger share of income and rising oil production provided the government with increased revenues with which to finance industrial development. In addition, slow but steady progress was made in reestablishing Iran's relations with Western powers in the aftermath of nationalization. The resolution of the oil crisis in 1954 (nationalization of oil and the signing of the Consortium Agreement) 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.

Following the quadrupling of oil prices in the last quarter of 1973, prices remained relatively stable from 1975 to 1978. During this period, Shah Mohammad Reza Pahlavi encouraged a high level of oil production and increased spending on imported goods and services and on military and economic aid to a small number of Iran's allies. The bazaar did not benefit from the 1974-78 oil boom. As a consequence, bazaar members helped lead and finance the Revolution. The series of national reforms and development programs that the Shah had embarked on in the 1950s came to be known in 1963 as the "White Revolution".

Following the 1979 Iranian Revolution, Khomeini's government shifted the emphasis by decreeing a policy of oil conservation, with production reduced to a level sufficient to do no more than meet foreign exchange needs.

The efforts, initiated by the Shah, to develop the petrochemical industry were thwarted by the Iran-Iraq War. The Shah had begun construction of a large petrochemical plant at Bandar Shahpur (now Bandar-e Khomeini) to produce fertilizers and sulfur. The plan was to expand production to include aromatics and olefins in a joint venture with Mitsui, a Japanese consortium. The plant, which cost US$3 billion, had almost been completed at the time of the Revolution. Iraqi planes bombed the still-unfinished plant in late 1986. Other petrochemical plants were completed soon after 1979, including the Khemco sulfur plant on Khark Island and a fertilizer plant at Marv Dasht near Shiraz.

In 2000, Iran, which was the world's fourth largest producer of crude oil, averaged about 3.72 million barrels per day (Mbbl/d). Average crude production had been 3.56 Mbbl/d in 1999 and 3.63 Mbbl/d in 1998. At the end of 2000, Iran had the second largest natural gas reserves (23 trillion cubic meters) and the fifth largest crude oil reserves [89.7 billion barrels (Gbbl)] in the world according to the Oil & Gas Journal (2000b). These figures apparently did not include 1999 or 2000 Iranian reserve additions. Petroleum continued to provide the bulk of Iran's foreign exchange.

As of late 2002, Iran held 90 billion barrels of proven oil reserves, or roughly 9% of the world's total. The vast majority of Iran's crude oil reserves were located in giant onshore fields in the southwestern Khuzestan region near the Iraqi border and the Persian Gulf. Most of Iran's existing oil production at the time was accounted for by the following fields: Ahwaz-Bangestan (150,000-170,000 bbl/d current production, with plans to increase to 400,000 bbl/d), Marun, Gachsaran, Agha Jari, and Bibi Hakimeh. Most of Iran's crude oil was low in sulfur, with gravities in the 30-39 API range. During 2002, Iran produced about 3.5 million bbl/d of oil. Iran's sustainable crude oil production capacity was estimated by mid-2003 to be at around 3.75 million bbl/d, which was around 250,000 bbl/d above Iran's most recent OPEC production quota of 3.597 million bbl/d, made on 1 February 2003.

The gross domestic product of Iran was estimated to be $110.8 billion in 1999. Although inflation was high, according to the Iranian Central Bank, it dropped to about 13% in 2000 compared with 14.5% in 1998 and about 50% in 1995. Iran's economy, which relied heavily on oil export revenues (around 80% of total export earnings, 40%-50% of the government budget, and 10%-20% of GDP), was hit hard by the plunge in oil prices during 1998 and early 1999, but with the rebound in oil prices thereafter, had recovered somewhat. For 2002, Iran's real GDP grew by around 4%. For 2003 it was expected to grow at a slightly higher, 4.3% rate. Relatively high oil export revenues the past year or two allowed Iran to set up an oil stabilization fund. For 2003, Iran's budget anticipated a price of around $18.50 per barrel, well below levels at the time.

On 29 October 2004 Iran and China announced the signing of a deal on Chinese investment in Iran's oil fields and the long-term sale of Iranian natural gas to China that could eventually be worth $100 billion. The gas deal entailed the annual export of some 10 million tons of Iranian liquefied natural gas (LNG) for a 25-year period. The deal was noted to have the potential to reach 15-20m tons a year, taking the total value to as much as $200bn. Delivery could not begin for at least five years, as Iran had to first build the plants to liquefy the natural gas. This stunning development was widely considered a major blow to the Bush administration's sanctions on Iran. The Iran-Libya Sanctions Act (ILSA) penalized companies investing more than $20 million in Iran's oil and gas sector. Iranian officials were hopeful the deal would lead to a fundamental rethinking of doing business with Iran on the part of European countries, India, Japan, and even Russia.

Iran possessed abundant fuels from which to generate energy, ranking second in the world in natural gas reserves and third in oil reserves. Nevertheless, in 2005 Iran spent US$4 billion dollars on fuel imports, mainly because of inefficient domestic use. Oil industry output averaged about 4 million barrels per day in 2005 and 2006, compared with the peak output of 6.6 million barrels per day reached in 1976. In the early 2000s, industry infrastructure was increasingly inefficient because of technological lags.

In 2007 Iran had 19,161 kilometers of natural gas pipelines, 8,438 kilometers of oil pipelines, 7,936 kilometers of pipelines for refined products, 570 kilometers of pipelines for liquid petroleum gas, and 397 kilometers of pipelines for gas condensate. Iran's central pipeline infrastructure was designed for the distribution of natural gas for domestic use and for the domestic transit of oil, including from offshore oil fields to processing centers. That structure was subsequently supplemented as the natural gas industry and the fuel export industry expanded. Since 2000 several new natural gas pipelines were planned. In 2006 plans called for new pipelines to exploit markets in Armenia and Pakistan. In 2007 a new 160-kilometer line to Armenia began operations. However, a 2,600-kilometer line to Pakistan, which potentially also could supply India, remains in the negotiation stage. Some had failed by 2008 because of geopolitical considerations (for example, US opposition to a key Iranian role in delivering Central Asian oil and gas to the West), and some, such as the gas export line from Iran to Turkey, function at reduced capacity.

Natural gas had also become important to Iran's economy, output of which in 2006 was 105 billion cubic meters. A large share of Iran's natural gas reserves are believed to remain untapped, although gas already accounted for nearly one-half of energy consumption. With massive government investments planned, the share of gas in energy production was expected to rise quickly in ensuing years. In 2007 Iran's estimated income from exports was US$76.5 billion (free on board-f.o.b.), 85 percent of which came from petroleum and natural gas.




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