Not so long ago, the world was a witness to the staggering consequences of record-breaking crude oil prices that hit the market almost overnight. Indeed, there was time when oil price was pegged at an unbelievable $140 per barrel. Many thinkers suggest that the key to understanding the steep rise of crude oil prices lays in the world’s mammoth demand for oil – which is set to balloon by as much as 40% in 2030 – led primarily by the United States, and secondarily by the burgeoning economies of China and India (Walt, 2007, n.p.). Herein therefore it is necessary to admit that the world needs oil-producing countries now more than ever. In particular, it is with good reasons to suppose that the world needs the countries in Gulf region, specifically Iran, to maintain and sustain the global economy.
Iran and the Importance of Its Oil
Iran’s special role in keeping the world economy afloat cannot be underestimated. In a manner of speaking, the world needs the Iran to light up homes and cities, run cars, fly planes, sustain industries, and operate all things dependent on oil. Simply put, the world economy needs Iran because of its oil. And despite having been continually threatened and downplayed by the United States of America, the fact that the country stands as one of the major oil-producing states for this generation, and that there seems to be no other viable alternative means that can supplant oil as the world’s major source of energy, makes Iran an undeniably important state for the world to reckon with esteem and respect.
Iran is one of the few countries of the Gulf region – along with Saudi Arabia, Bahrain, Iraq, Qatar and the United Arab Emirates – believed to produce for nearly 30% of the world’s oil, and nearly 60% of the world’s total reserves for crude oil (Cordesman & Kleiber, 2007, p. 23). Specifically, it helps to cite that Iran’s “132 billion barrels of oil” in its keeping accounts for nearly 10% of the world’s oil reserves. That and more, Iran is believed to own a whopping “970 trillion cubic feet of natural gas reserves,” which is equivalent to more or less 15% of the world’s total output (Cordesman & Kleiber, 2007, p. 23). And since Iran’s domestic decisions on crude oil production is often in consonance with the corporate decisions of its oil-producing counterparts, then it must be argued that any decision which Iran and the members of the OPEC opt to take shall have wide-ranging impacts to the world and its economic activities.
Still, Iran’s importance does not solely depend on its capacity to produce a significant amount of oil, inasmuch as Iran’s geographical location is another asset that cannot be downplayed. Akin to Saudi Arabia, Iran has a massive geographical territory; its landmass located in the Northeastern part of the Gulf region though. The country is between two bodies of water – Caspian Sea in the North and Gulf of Oman in the South – and has a waterway, called Strait of Ormuz, which is crucial in the transportation of a huge portion of the world’s traded oil. According to Cordesman and Kleiber, Iran’s Strait of Ormuz is so crucial, the amount of oil being transported there accounts for the nearly 40% of the oil being traded all over the world (2007, p. 23). Countries in the east like Japan, China and India are dependent on the oil transported through this strait, while countries lying along the Northwestern region – European states, that is – is said to also benefit from the same.
To briefly conclude, this paper reaffirms that Iran is a country the world cannot afford to lose. The importance of Iran to world can never be underestimated chiefly on account of its oil and its capacity to transport it to both the eastern and western hemisphere of the globe. Put in other words, Iran not has the ability to produce oil, but it also oversees the timely exportation of crude oil and its by-products to propel world economies that rely on oil-generated energy.
Cordesman, A. & Kleiber, M. (2007). Iran’s Military Forces and Warfighting Capabilities: The Threat in the Northern Gulf. Santa Barbara, CA: Greenwood Publishing Group
Walt, V. “Oil Prices: It Gets Worse”. Time Magazine, November 07, 2007. Retrieved 27 February 2009, from ;http://www.time.com/time/business/article/0,8599,1681362,00.html;.