The Persian Gulf, also known as the Arabian Gulf, is a 600-mile-long body of water which separates Iran from the Arabian Peninsula, and one of the most strategic waterways in the world due to its importance in world oil transportation. At its narrowest point (the Strait of Hormuz), the Gulf narrows to only 34 miles wide.
There have been, and continue to be, significant territorial disputes between Persian Gulf countries. Besides the Iraqi invasion of Kuwait in August 1990, and before that the Iran-Iraq War from 1980 to 1988, another important dispute is between the UAE and Iran over ownership of three islands -- Abu Musa, Greater Tunb Island, and Lesser Tunb Island, all strategically located in the Strait of Hormuz. The three islands were effectively occupied by Iranian troops in 1992. In 1995, the Iranian Foreign Ministry claimed that the islands were "an inseparable part of Iran." Iran rejected a 1996 proposal by the Gulf Cooperation Council (GCC) for the dispute to be resolved by the International Court of Justice, an option supported by the UAE. On December 31, 2001, the GCC issued a statement reiterating its support for the UAEs sovereignty over Abu Musa and the Tunbs, declared Irans claims on the islands as "null and void," and backed "all measures...by the UAE to regain sovereignty on its three islands peacefully."
The Persian Gulf contains 715 billion barrels of proven oil reserves, representing over half (57%) of the worlds oil reserves, and 2,462 Tcf of natural gas reserves (45% of the world total). Also, at the end of 2003, Persian Gulf countries maintained about 22.9 million bbl/d of oil production capacity, or 32% of the world total. Perhaps even more significantly, the Persian Gulf countries normally maintains almost all of the worlds excess oil production capacity. As of early September 2004, excess world oil production capacity was only about 0.5-1.0 million bbl/d, all of which was located in Saudi Arabia.
According to the Energy Information Administrations International Energy Outlook 2003, Persian Gulf oil production is expected to reach about about 26 million bbl/d by 2010, and 35 million bbl/d by 2020, compared to about 21.7 million bbl/d in 2000. This would increase Persian Gulf oil production capacity to 33% of the world total by 2020, up from 28% in 2000.
In 2003, Persian Gulf countries had estimated net oil exports of 17.2 million bbl/d of oil.Saudi Arabia exported the most oil of any Persian Gulf country in 2003, with an estimated 8.40 million bbl/d (49% of the total). Also, Iran had estimated net exports of about 2.6 million bbl/d (15%), followed by the United Arab Emirates (2.4 million bbl/d -- 14%), Kuwait (2.0 million bbl/d -- 12%), Iraq (0.9 million bbl/d -- 9%), Qatar (0.9 million bbl/d -- 5%), and Bahrain (0.01 million bbl/d -- 0.1%).
Major offshore Persian Gulf oil fields include Khafji and Hout, both of which are connected to Saudi Arabias Safaniyah, the worlds largest offshore oilfield (with estimated reserves of 35 billion barrels). Offshore production includes Arab Medium crude from the Zuluf (over 500,000 bbl/d capacity) and Marjan (270,000 bbl/d capacity) fields and Arab Heavy crude from the Safaniya field.
The Doroud 1&2, Salman, Abuzar, Foroozan, and Sirri fields comprised the bulk of Irans offshore output, all of which is exported. Iran plans extensive development of existing offshore fields and hopes to raise its offshore production capacity sharply to 1.1 million bbl/d from about 675,000 bbl/d currently. In early October 2003, Iran re-launched a tender for eight exploration blocks in the Persian Gulf after receiving little interest from a January 2003 announcement. One area considered to have potential is located near the Strait of Hormuz. Another interesting area is offshore near Bushehr, where Iran claimed in July 2003 to have discovered three fields with as much as 38 billion barrels of oil reserves.