Iran's oil exports 'could disappear by 2015'

Iran is suffering a staggering decline in revenue from its oil exports, and if the trend continues income could virtually disappear by 2015, according to a US report.

An analysis published in a journal of the National Academy of Sciences says Iran’s economic woes could make the country unstable and vulnerable, with its oil industry crippled.

Roger Stern, an economic geographer at Baltimore’s Johns Hopkins University, predicts that in less than five years exports could be halved and then disappear by 2015.

Iran earns about £26bn (€38.7bn) a year in oil exports. The decline is estimated at 10 to 12% annually.

For two decades, far longer than its designation by US president George Bush in January 2002 as part of the “axis of evil”, the US has deployed military forces in the region in a strategy to pre-empt emergence of a regional superpower.

Iraq was stopped in the 1991 Gulf War, but Iran remains a target of US threats.

The US military exercises have not stopped Iran’s drive. But the report said the country could be destabilised by declining oil exports, hostility to foreign investment to develop new oil resources and poor state planning.

Stern’s analysis, which appears in this week’s edition of the Proceedings of the National Academy of Sciences, supports US and European suspicions that Iran is trying to develop nuclear weapons in violation of international understandings. But, Stern says, there could be merit to Iran’s assertion that it needs nuclear power for civilian purposes “as badly as it claims”.

He said oil production was declining and both gas and oil were being sold domestically at highly subsidised rates. At the same time, Iran was neglecting to reinvest in its oil production.

“With an explosive demand at home and poor management, the appeal of nuclear power, financed by Russia, could fill a real need for production of more electricity,” he said.

Iran produces about 3.7 million barrels a day, about 300,000 barrels below the quota set for Iran by the oil cartel, the Organisation of Petroleum Exporting Countries (Opec).

The shortfall represents a loss of about £2.8bn (€4.2bn) a year, Stern says. In 2004, Iran’s oil profits were 65% of the government’s revenues.

If the US could “hold its breath” for a few years it might find Iran a much more conciliatory country, he said. And that, he said, was good reason to belay any instinct to take on Iran militarily.

“What they are doing to themselves is much worse than anything we could do,” he said.

“The one thing that would unite the country right now is to bomb them. Here is one problem that might solve itself.”