Iran’s Underdeveloped Natural Resource Economy

The independent regional power is rich in oil, natural gas, and minerals. Yet these provide few advantages both due to a failure to build up industry and persistent sanctions on exports.

Skyline of the Iranian capital Tehran in 2018. Photo by Ninara. Source.

The Islamic Republic of Iran is the crossroads between the Middle East, South Asia, and Central Asia. With a population of nearly 90 million people, it is not only one of the largest countries in its vicinity, but an independent military power with a domestic nuclear program and interventionist foreign policy opposed to the United States and Israel. In addition to significant mineral wealth, Iran is estimated to have the second-largest proven natural gas reserves in the world after Russia—34 trillion cubic meters to Russia’s 48 trillion—and the fourth-largest proven oil reserves after Venezuela, Saudi Arabia, and Canada—157 billion barrels to Saudi Arabia’s 266 billion.¹ Yet despite similarly high hydrocarbon production rates, Iran is not a top exporter of either oil or gas.² Sanctions on the Iranian economy from the U.S., European Union (EU), and United Nations (UN) have led to Iran consuming its own hydrocarbons domestically rather than exporting them for profit.