Week #6; Iran's Ace (or Deuce) - Its Oil Reserves

To read the full New York Times article, click here. The article Iran's Ace (or Deuce) - Its Oil Reserves is about Iran believing that they are not going to be easily influenced by sanctions in Washington because they believe that they will have future ties to China, Russia, and France through their energy resources. Iran further tried to prove this point by occupying a disputed oil field on the Iraqi border, this was to serve as a reminder that Iran is not happy with Iraq getting foreign oil investments and to show Iran's ability to stop traffic in the Strait of Hormuz. Iran is currently Beijing's second biggest oil supplier behind Saudi Arabia and a year ago China National Petroleum Organization signed a 4.7 billion dollar contract to finish developing one huge Iranian gas field and an understanding that they would eventually develop and oil field. However, Iran's recent ability to make nuclear weapons has caused the European idea for investing to cool off and even Russia has been more in favor of sanctions. It seems as if Iran is counting on the Chinese to back them when it comes to the US and the Security Council creating international sanctions that could really hurt Iran, but so far, China has shown reluctance to go against the US particularly when it comes to the Persian Golf. As for the strength of Iran's energy sector, they have very few refineries, import 40% of their gasoline, and have to keep oil prices above $90 a barrel to keep their budget balanced, not to mention that there is no longer a shortage of oil and most of the excess is in Saudi Arabia. This article relates to what we have been studying because the Iranian government is trying to prove their legitimacy through international contracts and their economy, but the fact that some countries seem to be doubting whether or not it will work could hurt their Iranian government's legitimacy.



**Thanks to SisPau of Flickr for the image
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