The Middle East is often referred to as a perennial geopolitical hotspot, the bedrock of shifting power play of partnerships, and constant shift of alliances – all in the midst of emerging and demising local powers. Iran sits at the epicenter of this political, economic and social development in the neighborhood. On one hand, as a prominent OPEC member, Iran quietly aims to exert influence through energy diplomacy in its relentless pursuit to elevate its rank from a regional to global power status. On the other hand, resting on a young, educated population with rich energy reserves and vast terminal capacity on the Gulf, Iran’s engagement in bold expansion policies has an underlying intention to boost its hegemony in the region and to play the role of a great power in world political affairs.
Iran is the second largest economy in the Middle East and North Africa (MENA) region after Saudi Arabia – its main regional rival, whose economic activity and government revenues still depend largely on oil revenues and therefore remain volatile. While the western sanctions have reduced Iranian oil exports by about two thirds, causing Iranian currency “Rial” constantly to depreciate its value, the World Bank estimates that Iran will grow by 1.9 % in 2015. Iran’s current oil production is just over 3 million b/d and while this is expected to increase after the lifting of all sanctions, in reality, it can add no more than 300,000 – 500,000 b/d barrels to its actual oil production due to fast depleting oil fields and underinvested infrastructure.
Before the Islamic Revolution, in 1974, Iran was a regional ally of Israel and had received close support of the U.S. administration to start its controversial nuclear program for peaceful purposes, due to fast maturing oil fields and excessive production under the Shah regime. The situation met with bitter sanctions in the wake of post-revolution Iran-Iraq War, when Iran tried to achieve military self-sufficiency and re-initiated the program, casting serious concerns in the west towards Iran’s hidden agenda.