National Iranian Oil Company

Stock performance

History

The National Iranian Oil Company was created in 1951, when Prime Minister Mohammad Mosaddegh's government nationalized the British-controlled Anglo-Iranian Oil Company, a move that led to a Western boycott of Iranian oil and the 1953 coup that overthrew him. NIOC nonetheless survived as the state's oil company, partnered with foreign consortia under the Shah, and took full control of the industry after the 1979 revolution.

Business model

NIOC, under the Ministry of Petroleum, controls the exploration and production of Iran's oil and gas, which rank among the largest reserves in the world, including Iran's share of the giant South Pars gas field shared with Qatar. Because US sanctions bar most international buyers, a large share of its crude exports now go to China through discounted sales and intermediary networks, while domestic gas output feeds power plants, industry, and heavily subsidized household consumption.

Market position

By reserves NIOC is one of the largest oil companies in the world, but its production and exports have been held well below potential for most of the past two decades by sanctions, limited access to foreign technology and investment, and aging fields.

Country impact

Oil revenue has historically funded a large share of Iran's government budget and foreign-currency earnings, so changes in NIOC's export volumes, driven largely by the tightening or loosening of sanctions, translate directly into swings in Iran's GDP, inflation, and exchange rate.