A Brief History of Oil Production In the Middle East (1965 – 2013)


World Oil Production (1965-2013)

There is so much information to glean from looking at past oil production numbers!  The history of oil production in the middle east (the orange curve) is especially interesting because of the large fluctuation.

Three of the largest oil producers in the middle east are Saudi Arabia, Iran, and Iraq, and all of these countries are members of OPEC (Organization of the Petroleum Exporting Countries).  OPEC was formed by countries to coordinate policies on oil and keep the seven large petroleum companies at the time from taking advantage of them.  The large fluctuation in middle eastern oil production is primarily a result of OPEC countries using their vast oil reserves to affect politics and economics. 

From the beginning of the data set (1965) until 1973 oil production in the middle east was booming, with exponentially growing production numbers.  Then in 1973 OPEC made a political move, causing this trend of growth to break, and oil production numbers to level off.

In 1973, Egypt and Syria led a surprise attack on Israel on the holiest day of the Jewish calendar – Yom Kippur.  In response to the Soviet Union supplying Egypt and Syria with weapons, the United States decided to provide Israel with weapons and supplies.  OPEC retaliated by cutting oil exports to the United States, causing the 1973 US “oil shock”. This move caused oil production in the middle east to level off until 1979.

Following 1979 there is a dramatic decrease in middle eastern oil production.  Initially the downturn is due to decreased oil production in Iran and Iraq.  In 1979 The Iranian revolution caused a decrease in Iranian oil production.  This decrease was intensified by the destruction of many oil sectors in Iran and Iraq during the Iran-Iraq war of 1980 – 1988.  The shortage of world oil supply resulted in widespread panic and shock, which caused oil prices to skyrocket.   These extravagant oil prices stimulated rapid growth in oil suppliers throughout the world, causing oil prices to eventually fall back down in 1982.  In order to keep oil prices from falling, OPEC countries reduced production dramatically – implementing a production quota for each country.  These quotas on oil production is what we see reflected in the 5-year decline from 1980 – 1985 in middle eastern oil production.

However, Iran and Iraq were in the middle of a war, and kept exceeding their production quota to fund their military.  This forced Saudi Arabia to reduce production again and again to keep the price of oil high enough.  Finally, in 1986, Saudi Arabia threw in the towel, and increased oil production dramatically to take back their share of market control.  Middle eastern oil production continued to increase as OPEC re-established new production quotas, the Iran-Iraq war ended (1988) and demand in the industrialized world increased.

Data Source:

Oil production data was taken from the ‘Statistical Review of World Energy 2014 – Historical data workbook‘ – BP and can be accessed here: http://www.bp.com/en/global/corporate/about-bp/energy-economics/statistical-review-of-world-energy.html





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