Targeted energy infrastructure raises new risks
Amid rising regional tensions, Iranian energy sites have become primary targets in a series of military strikes. Key oil storage facilities, refineries, power plants, and gas operations—including the major South Pars field—were hit during recent escalations.
South Pars, located in southern Iran’s Bushehr province, supplies the majority of the country’s gas production. Iran shares control of this massive reserve with neighboring Qatar. Following the attacks, Iran was forced to partially suspend output at the site, raising concerns about the reliability of future supplies.
Further escalation could disrupt broader energy markets, as Iran remains a major player in both oil and gas exports despite years of sanctions and isolation.
Heavy reliance on hydrocarbons
Iran possesses the world’s second-largest proven natural gas reserves, according to data from international energy monitors. In 2023, the country produced about 266 billion cubic meters (bcm) of natural gas, with roughly 255.5 bcm consumed domestically and around 15.8 bcm exported.
In addition, Iran holds the third-largest crude oil reserves globally, accounting for nearly 9% of the total. The country currently extracts about 3.3 million barrels of crude oil and 1.3 million barrels of condensates and other liquids per day, exporting approximately 1.8 million barrels, based on market data.
Oil and gas exports are central to Iran’s government revenue and foreign currency reserves, making the energy sector a critical economic pillar.
Energy revenues remain vital amid limited transparency
Estimates suggest Iran earned roughly $144 billion in oil revenue between 2021 and 2023. However, tracking the country’s exact export volumes remains difficult. Iran employs various techniques to conceal shipments, including disabling transponders, reflagging vessels, and transferring cargo at sea.
China continues to be one of Iran’s top oil customers, importing 1.71 million barrels per day (bpd) in March—up from 1.43 million bpd in February.
While oil prices briefly rose after the attacks, the effect was short-lived. By Monday, global benchmarks had dropped by over 1%, indicating market skepticism about sustained supply disruption.
Sanctions limit development potential
Despite its large reserves, much of Iran’s energy potential remains untapped. Aging equipment, underinvestment, and the need for advanced technology partnerships have hindered sector modernization.
A 2015 nuclear deal once promised relief from sanctions in exchange for curbs on Iran’s nuclear activity. However, the reimposition of sanctions in 2018 reversed that course, cutting off access to foreign capital and global markets.
Current restrictions target Iranian oil exports, banking operations, and maritime transport, severely limiting trade. Gas exports have declined, while the domestic economy faces inflation, currency devaluation, and frequent blackouts.
Systemic challenges persist
Sanctions alone aren’t responsible for Iran’s economic crisis. Decades of internal mismanagement, combined with ongoing regional tensions, have eroded infrastructure and investor confidence.
Even with substantial reserves, energy production is falling behind due to outdated technology and operational inefficiencies. Power shortages are increasingly common, and critical projects remain stalled without foreign investment.
As energy infrastructure becomes a strategic target, Iran’s heavy reliance on fossil fuel exports continues to expose its broader economic fragility.
