The recent OPEC decision not to slash production is a major setback to Iran’s fiscal health. Beset by sanctions, Iran’s most important source of revenue is under attack not by Israeli or American war planners but by market forces. The price of Brent crude, the benchmark, has sunk by 40 percent since June. North American production and Saudi Arabian insistence to maintain current levels of supply has led to a surplus of 1.5 to 2 million barrels a day. While the steep drop in oil prices is a blow to all exporters, the Arab countries of the Persian Gulf have sufficient cash reserves to weather the storm. Iran does not.
Years of war, sanctions, lack of proper investment as well as mismanagement and corruption within the Iranian oil industry—particularly under the stewardship of former President Ahmadinejad—have had the profound and long lasting effect of putting Iran behind other major crude producers. This is in sharp contrast to where Iran stood in the 1970s when the world looked at her oil exports with envy. At the time the late Shah was dubbed the “Emperor of Oil” by Time magazine as Iran held as much sway within OPEC as the Saudis do today. Iran was the second largest exporter in the cartel and the fourth largest producer in the world. At its peak, before the revolution, Iran was producing 6 million barrels a day.
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