Friday , 29 March 2024

US Energy Security Policy Gives Iran Less Negotiating Leverage

Iranwire – Iran is an important player in the world energy market, both for its vast oil and natural gas reserves and for its significant energy consumption. But US sanctions over Iran’s nuclear program have crippled the country’s energy production and exports in recent years.

While Iran’s stagnating infrastructure and inability to sell freely to world markets has left it struggling to meet the energy needs of its own people and its few remaining international customers, the United States has transformed itself from a major importer to a net exporter of petroleum products.

As Iran and the United States have moved in opposite directions in terms of energy security over the past 18 years, Tehran has seen its “negotiating power” with Washington diminish, the collaborative initiative Iran Open Data said in article published on March 30.

During rising tensions between the Islamic Republic and the West, Iranian officials routinely threaten to block the strategic Strait of Hormuz, through which about one-fifth of all oil traded at sea is passing.

Iran Open Data noted that the United States’ “’energy independence’ helps explain why US policymakers are unruffled by Iranian officials’ consistent threats to block the Strait of Hormuz, as well as by the current slowdown of Russian energy supplies.”

US Energy Security Policy Gives Iran Less Negotiating Leverage

The United States started on the pathway of energy independence in 2005, when net energy imports peaked at approximately 30 percent of the country’s energy consumption.

At that time, international oil companies started to leave Iran as the country’s new hard-line President Mahmoud Ahmadinejad was moving away from the reformist agenda of his predecessor, Mohammad Khatami, and foreign direct investment in its energy sector began to drop.

The United States was vulnerable to Ahmadinejad’s “firebrand politics” and was “reluctant to aggravate Russia, as it was highly dependent on the oil and gas supplies from the Middle East and Russia,” Iran Open Data said.

During the following decade, the United States slowly moved toward energy independence, with higher domestic energy supply, driven in part by unconventional oil and gas production and a ramp up in Liquified Natural Gas (LNG) and oil export projects, leading to declining energy imports.

The following chart shows how the United States has reduced its reliance on imported crude oil and petroleum products and became a net exporter in 2020.

US Energy Security Policy Gives Iran Less Negotiating Leverage

Iran Open Data said that the United States has now become “one of the largest LNG producers and the main supplier of LNG to Europe, filling the recent void on European Union gas markets created by the bloc’s sanctions on Russian gas exports.”

In the meantime, the Islamic Republic “spent a fortune on building a nuclear power plant, which today provides less than 1% of Iran’s power generation,” according to Iran Open Data.

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Iran Open Data’s article “How the U.S. Energy Transition Diminished Iran’s Long-Term Negotiating Power” is available here.

Founded in 2016, Iran Open Data (IOD) strives to make Iran’s official data accessible, available and re-usable. Not only does IOD collect and process raw datasets for researchers and experts, it also publishes exclusive data-driven articles and digital stories for the general public. Additionally, IOD conducts public data calls and surveys on often neglected or taboo issues that are rarely addressed by the government. Follow IOD for all the data-stories concerning Iran.

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