Iran's oil output to decline drastically

By Thomas Lifson

That's the conclusion of a new report from the National Academy of Sciences, reported in today's Washington Times.

Iran is experiencing a staggering decline in revenue from its oil exports and, if the trend continues, income could virtually disappear by 2015, according to an analysis released yesterday by the National Academy of Sciences.

Iran's economic woes could make the country unstable and vulnerable with its oil industry crippled, Roger Stern, an economic geographer at Johns Hopkins University, said in the report and in an interview.

Iran earns about $50 billion a year in oil exports. The decline is estimated at 10 percent to 12 percent annually. In less than five years, exports could be halved and then disappear by 2015, Mr. Stern predicted.

Stern indicates that this situation actually tends to justify Iran's atomic energy program, often dismissed as unnecessary. He is correct in this regard. However, it does not mean that the problems Iran poses for the West (and its neighbors) will go away as oil revenues decline.

On the contrary, Iran has every incentive to acquire new oil fields by invasion and absorption parts of Iraqi, Kuwaiti, and even Saudi territory. Acquisition of nuclear weapons would make such a scenario far more realistic. Declining oil prospects in Iran actually exacerbates the problem.

I am no expert, but I strongly suspect that application of latest recovery technology could expand Iran's oil output significantly. I also suspect that, as was the case in Iraq, further exploration opportunities have lain dormant while the country languishes as an unpredictable dictatorship, and that with use of cutting edge technology new oilfield development would be possible, if only Iran offered a reasonably secure political setting for the expenditure of the requisite billions.

Hat tip: Ed Lasky