Reducing Iran's Economic Vulnerability to the U.S. Shale Oil Entry into the Global Market

Document Type : Original Article

Authors

• Vida Varahrami ¹
• Mehdi Ferdowsian ²

¹ Shahid beheshti university

² Shahid beheshti

https://doi.org/10.22067/irlip.2022.72360.1147

Abstract

In recent years, the accelerated production of SHELL Oil has led to US Oil Independency alongside with fundamental changes in the oil market (acceleration in Oil supply and Constant decline of prices). But this oil independence has also led to fundamental changes in the US political and security perspective toward of oil-rich countries. Exerting maximum pressure for removing Iranian and Venezuelan oil from world markets is a clear indication of this change in US policy. The adherence of other countries (oil producers and consumers) with the United States also indicates the stability of US hegemony in the international arena. Therefore, by stating the conditions of the crude oil market, we provide an overview of the current situation of the crude oil market which indicates the existence of surplus oil for a long period time which reduces the probability of supply shocks in the oil market. On the other hand, by expressing the American hegemony from various aspects, we conclude that by using its power, the United States can impose its policies on the oil market without fearing the oil supply disruptions, and seize part of the market of oil rich countries. In the following, we introduce an index (which indicates the degree of political and economic alignment of oil-producing countries with the United States policies) in order to examine the US economic and political relations with oil-producing countries, and based on this index we introduce Russia as the next potential target for the United States at the oil market. Finally, by designing a dynamic game with complete information, we examine the choices of Iran and the United States for removing Iran from the oil market and then we evaluate the current strategy of Iran and the United States (which has led to elimination of Iran from the oil market) and the consequences of each action (US) and reactions (Iran) during this Oil game (war) in short-term, medium-term and long-term periods.

Keywords

• Global Crude Oil Market
• Sell Oil
• Iran
• US Game Theory

References

Frondel, M. & Horvath, M. (2020) The U.S. Frocking Boom: Impact on
Oil Prices, Ruhr Economic Papers Dynamic Network Analysis of the World
Oil Market: Analysis of OPEC and Non-OPEC Members. Eneeco, Energy
Economics.
Khatami, S. (2020), Analysis of Game Theory in Accounting Systems Respect
to Agents: OPEC Countries. Energy Economic Journal, 16(64). (in Persian).
Maduabuchi, U. & Jungho, B. (2017). Do Oil Prices Really Matter to US Shale
Oil Production?. Energy Sources, Part B: Economics, Planning, and Policy,
12(3), 268-274.
Sabtan, B, Kilgour, D M.D & Hipel, K.W (2019). Assessing the Effectiveness
of Economic Sanctions, EURO JDecis Process. 7, 69–82.
Shahrirari, S., Firoozan, S., & Farazmand, N. (2019). Survey Oil Policies of
Iran in OPEC, respect to Game Theory. Journal of Political Research In Islam,
9(1). (in Persian).
Torabi, M. & Manzoor, D. (2019). Survey Global Oil Market with Respect of
Shail Oil: Dynamic System. Energy Economic Journal, 15(63). (in Persian).
Tuama, A. S. (2018). The Impact of the Development in Shale Oil Production
on Crude Oil Prices and Future Prospects. A Literature Review, 10.
Zhulanovaz, J. H. & Bjrnlandy, C. (2018). The Shale Oil Boom and the U,S,
Economy: A Time-Varying Analysis. Centre for Applied Macro and Petroleum
Economics.