The Impact of Iran's Economic Sanctions on Iran and OPEC Countries's Crude Oil Trade: Application of the Generalized Gravity Model

Abstract

Economic sanctions in the field of international relations affect the trade pattern of countries. One of the effective channels of sanctions is exports (as the most important source of foreign exchange supply for countries). In this regard, oil exports to OPEC member countries, especially Iran, are among the most important economic revenues and have a high share in the country's budget. In the present study, the effect of sanctions on the pattern of trade in Iranian crude oil and petroleum products and also the effect of these sanctions on OPEC member countries in the framework of the generalized gravity model using panel data econometric models have been investigated. The research model is based on statistical data from 1988 to 2018 in the form of four periods of sanctions, including the first period of US sanctions, EU sanctions, UN sanctions, and the second period of US sanctions. The findings show that US-era sanctions and EU sanctions have had less of an impact on Iran's oil exports, but UN sanctions have had a significant impact on these oil exports and Iran's share of OPEC exports. According to research findings, other OPEC member countries have not had a significant impact on the replacement of the Iranian oil market, and this shortage has been mainly met by countries outside the OPEC.

Keywords

• trade
• sanctions
• crude oil exports
• gravity model
• panel data