• 6 hours Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 11 hours British Utility Companies Brace For Major Reforms
  • 15 hours Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 17 hours Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 18 hours Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 19 hours OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 20 hours London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 21 hours Rosneft Signs $400M Deal With Kurdistan
  • 24 hours Kinder Morgan Warns About Trans Mountain Delays
  • 1 day India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 1 day Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 2 days Russia, Saudis Team Up To Boost Fracking Tech
  • 2 days Conflicting News Spurs Doubt On Aramco IPO
  • 2 days Exxon Starts Production At New Refinery In Texas
  • 2 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 3 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 3 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 3 days China To Take 5% Of Rosneft’s Output In New Deal
  • 3 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 3 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 3 days VW Fails To Secure Critical Commodity For EVs
  • 3 days Enbridge Pipeline Expansion Finally Approved
  • 3 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 3 days OPEC Oil Deal Compliance Falls To 86%
  • 4 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 4 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 4 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 4 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 4 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 4 days Aramco Says No Plans To Shelve IPO
  • 6 days Trump Passes Iran Nuclear Deal Back to Congress
  • 7 days Texas Shutters More Coal-Fired Plants
  • 7 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 7 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 7 days Chevron Quits Australian Deepwater Oil Exploration
  • 7 days Europe Braces For End Of Iran Nuclear Deal
  • 7 days Renewable Energy Startup Powering Native American Protest Camp
  • 8 days Husky Energy Set To Restart Pipeline
  • 8 days Russia, Morocco Sign String Of Energy And Military Deals
  • 8 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
Alt Text

The New Challenger To Lithium Batteries

The lithium-ion battery is head…

Alt Text

Is OPEC Considering Deeper Output Cuts?

You could argue OPEC and…

Gregory Brew

Gregory Brew

Gregory Brew is a researcher and analyst based in Washington D.C. He is currently pursuing a PhD at Georgetown University in oil history and American…

More Info

Could The Gulf Dispute Actually Help Iran?


The on-going diplomatic feud in the Persian Gulf pitting Qatar against a coalition of Arab states led by Saudi Arabia has already disrupted regional affairs to a significant extent: economic blockades, rejected airspace and closed embassies are just a few features of this sudden, somewhat unexpected rift between Doha and the rest of the Gulf.

Triggered by a hack of Qatar’s state website (a cybercrime which investigations have confirmed originated in the United Arab Emirates) that portrayed the country’s ruler as supporting the Islamic Republic of Iran, the feud is largely fueled by anger in Riyadh and other Arab capitals over Qatar’s independent foreign policy, particularly its alleged backing of terrorist groups and its relationship with Tehran.

An economic blockade on Qatar has not had a serious impact on the country’s ability to export natural gas, though there remains some risk it could force Doha to stray from OPEC’s production agreement.

In the wake of the crisis, there has been some speculation that Qatar, a U.S. ally, will draw closer to Iran’s orbit as a result of its feud with Saudi Arabia and the rest of the Arab world.

Ostracized by the rest of the Gulf, which largely sees Iran as a threat to regional stability, Qatar has relations with Iran that center around energy. The two countries share a massive natural gas field in the Persian Gulf and have cooperated in the past on the field’s exploitation, albeit often indirectly. The two countries do not join to develop the field but instead keep it separated into two distinct national zones. A Qatari-Iranian committee meets once a year to review outstanding issues that arise over sharing the field. Related: The Qatar Blockade Is Threatening The OPEC Deal

As Bloomberg notes, the diplomacy governing the South Pars/North Field shared by Qatar and Iran has been half competitive, half cooperative. Both countries view the field as a source of tremendous wealth but are wary of letting the other side pump more and siphon gas off from the main field.

In 2005, Qatar chose to halt further development of South Pars, arguing it needed time to study the field: yet the move was probably dictated by market calculations, as supplies of liquefied natural gas (LNG, Qatar’s chief export) exceeded world demand. Qatar ended this moratorium in April 2017.

Iran, on the other hand, has pressed ahead with its development of South Pars, drawing on fresh investment from its deal with Total. Since 2014 Iran has made developing South Pars a priority, and in 2020 its production from the field will exceed that of Qatar, according to Bloomberg.

Years of international sanctions and decaying infrastructure has kept Iranian LNG exports down, something which the Iranian government is eager to change, especially since Qatar has used its natural gas resources to transform itself into one of the world’s richest economies, a top LNG-exporter and regional powerhouse.

Despite the chance the two countries may come closer together in the wake of the Gulf feud, there remains a great deal separating them. Qatar remains a key U.S. ally (though President Donald Trump has indicated he favors Saudi Arabia) and home to a major U.S. military base. Iran backs the Syrian President Bashar Al-Assad, and Qatar has funded groups in the Syrian civil war which have bitterly opposed Assad’s ongoing rule.

On the energy front, Qatar and Iran compete for share of a global LNG market which has becoming increasingly crowded by new producers, including the United States. Qatar’s decision to end the moratorium on further development of the North Field is largely due to its concerns that increasing investment in LNG globally will reduce its competitiveness.

Despite holding the status of number one LNG exporter for more than a decade, Qatar’s market share has slowly been declining and now stands at nearly thirty percent of global LNG demand.

Related: Will Oil Inventories Continue To Fall Over The Summer?

Since lifting the moratorium Qatar has increased gas production from South Pars (or North Field, as it’s called in Doha). It announced a new development that will increase gas production by thirty percent, from 77 million tons to 100 million tons per year. Qatar possesses the third-largest gas reserves in the world, behind Russia and Iran.

The plans to increase production would net yearly revenues of around $30 billion to Qatar, and international oil companies like ExxonMobil, Shell and Total are lining up for opportunities to join the new gas rush in the Gulf.

There’s little chance that Qatar, with a population of 2.5 million and an upcoming commitment to hose the World Cup in 2020, will choose to back away from the North Field. Its plans to increase production and retain its position as the world’s preeminent LNG exporter could upset Iran’s ambitions in that regard. Sharing the North Field/South Pars could become more acrimonious as the stakes become more serious. Then again, if the Gulf feud becomes worse and pressure on Doha builds, Qatar may find itself looking to Iran for support.

By Gregory Brew for Oilprice.com

More Top Reads From Oilprice.com:

Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News