Oil is the lifeblood of the Iranian economy. Oil exports provide half of Iran’s government revenues and account for 80 percent of the country’s total exports, according to the Financial Times. As oil from mature fields becomes harder to extract, new technology and management techniques are needed to slow the decline in output. Fellow hydrocarbon behemoths Saudi Arabia and Venezuela have succeeded in squeezing more production from their wells, but years of U.S. sanctions have deterred the foreign investment and innovation Iran’s oil industry desperately needs.So it’s no surprise that Iran oil production has now fallen to a ten-year low of 3.8 million barrels per day, according to estimates from the International Energy Agency (IEA). The IEA also noted that the looming European Union oil embargo (which commences this summer) could send Iranian oil production plummeting even lower, to levels not seen since the Iran-Iraq war in the 1980s.If the EU embargo has the kind of impact it is designed to have—and the IEA report suggests it will—Tehran is going to come under enormous internal pressure to do something about it.In his news conference with British Prime Minister David Cameron on Wednesday, President Obama reiterated his tough stance, claiming he was “determined to prevent Iran from getting a nuclear weapon” and that “the window for solving this issue diplomatically is shrinking.”This much is clear: Iran cannot accept a status quo in which oil production continues to fall. If President Obama sticks to his belief that a nuclear Iran is unacceptable, the two countries will remain on a collision course.
Iran Oil Production Hits 10-Year Low