And in the first four months of 2008, oil output decreased 1.5% compared with the same period in 2007. There are fears that rising costs and aging fields mean output could decrease this year for the first time in a decade.
Iran too has experienced an increase in clout and a weakening of democracy as the price of oil has risen. The Islamic Republic has been able to simultaneously expand its influence, bolster military capability and suppress dissent.
For The Record
Los Angeles Times Saturday, July 19, 2008 Home Edition Main News Part A Page 2 National Desk 1 inches; 44 words Type of Material: Correction
Russian official: An article in Thursday's Section A on how some oil-rich nations are feeling empowered to oppose U.S. policies misidentified Grigory Yavlinsky as head of Russia's opposition Yabloko party. Yavlinsky stepped down as party chairman June 21 and was replaced by Sergei Mitrokhin.
Since the 1979 Islamic Revolution, the price per barrel has played a critical role in determining the tone of relations between the U.S. and Iran, which is heavily dependent on energy exports to finance its gigantic public sector, its military and its foreign allies.
In the 1990s, with oil prices bottoming out and foreign debt piling up, Iran was forced to moderate its domestic and international policies to attract European investment and trade with Persian Gulf states.
With oil at an inflation-adjusted $24 a barrel and dropping, reformist Mohammad Khatami was elected president with a mandate to make Iran a more open country.
But by 2002, with oil at $27 and rising, analysts detected a drift toward greater authoritarianism, including a crackdown on the independent media and the arrests of dissidents and members of Khatami's entourage.
With oil at $55 a barrel, conservative President Mahmoud Ahmadinejad ascended to power in 2005. Record oil prices have enabled Ahmadinejad to offer low-interest loans or food coupons to government supporters, launch infrastructure projects and import large amounts of food to keep commodity prices low. Meanwhile, journalists, activists and bloggers are silenced by intimidation or jailing.
Tehran earned more from oil money in May 2008 than it did in all of 1998, the height of Khatami's power.
Iran's nuclear program has become one of the major foreign policy worries of the Bush administration and Israel, as well as a grave concern for Europe and the Arab world.
Iranian backing for militant groups in the Palestinian territories and Lebanon did not begin with the oil boom. But its strong role in Iraq, along with the rapid expansion of its uranium enrichment program over the last two years, did.
"You can't attribute that entirely to higher oil prices," said Paul Sampson, a London-based analyst for Energy Intelligence, a trade publisher covering the oil and gas industries. But "the fact is that the hard-liners have become more entrenched because they have this constant stream of oil revenue."
