Modeling the development and market enhancement of Iran's oil in OPEC with game theory

Sotoudeh, Yaser; Niksokhan, Mohammadhossein; Salmanvandi, Hossein

doi:10.22050/pbr.2025.503926.1381

Modeling the development and market enhancement of Iran's oil in OPEC with game theory

Document Type : Original Article

Authors

Yaser Sotoudeh ¹

Mohammadhossein Niksokhan ²

Hossein Salmanvandi ³

¹ Director of the Department of Energy, System of Issues Think Tank, Iran

² Professor, Faculty of Environment, University of Tehran, Tehran, Iran .

³ Faculty of Chemical Engineering, University of Tehran, Tehran, Iran

https://doi.org/10.22050/pbr.2025.503926.1381

Abstract

In this paper, the competitive market of crude oil exports of Iran and the world is modeled using game theory. In the present research, we have focused on OPEC's internal competition within the game theory framework to analyze the economic conflicts between OPEC members in detail. In the conditions where each of the producers has their own goals and limitations, the amount of access to the desired goals for each producer depends not only on the decisions they make, but also is affected by the prevailing atmosphere in the oil market, including the strategy of other competitors, sanctions, and different situations of economic growth and oil sale price level. In recent years, Western countries, especially the United States, have imposed extensive sanctions against Iran, mainly targeting. In this regard, three players of Iran, Saudi Arabia, and the United States of America (USA) were defined and a model for the game between them was presented. Then the presented model was solved as a cooperative game and the equilibrium point was obtained for it. The results obtained showed that the three main players have the conditions for cooperation by choosing the options of "reducing pressure and fewer sanctions", "reducing pressure and cooperation", and "cooperation", and Iran can only improve its conditions by competing with Saudi Arabia in OPEC.

Highlights

· Analyzed the sales and export of Iranian oil from 1997 to 2013.

· Modeling the Iranian oil market in OPEC with the game theory and three main players.

· Determining practical strategies for cooperation, reducing pressure, and minimizing sanctions for Iran, the United States, and Saudi Arabia.

· The impossibility of bringing Iran’s oil exports to zero considering the strategies for circumventing sanctions.

Keywords

Game theory

Oil market

Crude oil

OPEC

Iran

Subjects

Energy Management and Engineering

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