Iran was the fourth-largest crude oil producer in OPEC in 2023 and the third-largest dry natural gas producer in the world in 2022.1 It holds some of the world’s largest deposits of proved oil and natural gas reserves, ranking as the world’s third-largest oil and second-largest natural gas reserve holder in 2023.
At the end of 2023, Iran accounted for 24% of oil reserves in the Middle East and 12% in the world.2 Despite its abundant reserves, Iran’s total liquids production is limited because the oil sector has been subject to underinvestment and international sanctions for several years.
Although Iran is a member of OPEC, it is exempt from the production cuts under the OPEC+ agreement because its crude oil production is constrained as a result of sanctions. Despite these sanctions, Iran increased shipments of crude oil, primarily to China, in 2022 and 2023. Iran raised crude oil output by about 1 million barrels per day (b/d) from 2020 to 2023 as its exports to China grew by almost 870 million b/d during this time.3In response, the United States expanded sanctions in April 2024 to cover ports, vessels, and refineries involved in the purchase of Iran’s oil. These new sanctions allow for 180-day waivers if sanctions interfere with U.S. national security.4 If all oil sanctions were lifted, Iran’s crude oil production could return to full capacity, which we assess at 3.8 million b/d.
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