Industry specialists and analysts around the world have been keenly watching the oil market in relation to the situation that took place in Venezuela, where the U.S. intervened and removed the former leader, Maduro. The intervention by the U.S. was not just about removing Maduro but also about oil and control over the country’s oil reserves. However, it seems that the oil market has been barely fazed by the Venezuelan situation. Experts are more nervous and interested in the fate of Iran’s oil industry due to the unrest taking place inside the country.
There is a consensus among energy and resources experts that if the situation in Iran gets out of control, there will be a massive impact on global oil and financial markets. This was not the case with the removal of Maduro, but Iran is a much bigger player in the oil industry and produces roughly four times the amount of oil that Venezuela does.
Iran is the third-largest producer of oil in OPEC, and its output and exports account for an estimated 4% of global supply. In contrast, Venezuela produces only around 1%. Iran is also estimated to export around 2 million barrels per day, whereas Venezuela produces only about 350,000. These figures alone show that instability in Iran’s oil industry would create a much larger shock to global markets and prices.
There is also concern that the instability currently confined within Iran could spread, leading to a broader regional conflict. This is an important point, as almost half of the world’s oil reserves and around a third of global oil production are located in the region. If a regional conflict were to develop, there could be major consequences due to enormous disruptions to production and trade flows. Therefore, if major disruptions occur and Iranian production is stalled in any form, prices would likely rise rapidly in the short term, and it would take time for other suppliers to fill the gap.
BakuTiflis 