But analysts say that even if U.S. and EU sanctions, imposed in 2010 over Iran's refusal to abandon key elements of nuclear program, were lifted in the coming weeks Iranian oil output already faces long-term decline.
"Until 2011, Iran was the third largest oil exporter in the world, after Saudi Arabia and Russia," Oxford Analytica observed in a Feb. 25 analysis.
"However, rising domestic consumption, falling production and several rounds of sanctions have places significant pressure on export capacity."
Over the last year, the International Energy Agency, the West's energy watchdog, says Iran's output has fallen more than 1 million barrels per day, underlining the efficacy of the sanctions. In fourth quarter 2012, it was pegged at 2.6 million bpd.
Iran's troubles are strengthening the global market share of its competitors, particularly Saudi Arabia and Iraq.
Longtime rival Iraq is benefiting greatly, although Tehran is striving to ensure that Iraq falls within its orbit following the U.S. military withdrawal in December 2011.
While Iran's production slumps, Iraq's is steadily rising, thanks to the investment and advanced technology provided by international oil companies. Iraq's monthly production is 3 million bpd, the highest in 30 years.
Iraq, with the world's fourth largest conventional oil reserves of 143.1 billion barrels, has overtaken Iran to become the second biggest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia.
The IEA recently reported that Iraq will be able to hit 6.1 million bpd by 2020 and 8.3 million bpd by 2035.
Iran's unlikely to achieve near the level of foreign investment or technology it needs to revive its long-neglected energy industry. The sanctions aimed at blocking the flow of capital and advanced drilling technology are making it ever harder for Tehran to arrest the production decline of its oil and gas fields.
"What you're seeing is not so much the lack of money but the lack of technology and the loss of international partnerships that have had such a major effect on Iranian output," said a former government official.
"That goes for both oil and gas."
Despite all this, Iran still has major energy reserves, with proven oil reserves of 137 billion barrels, around 9.3 percent of the global total and 12 percent of OPEC reserves.
Most of the oil reserves held by the National Iranian Oil Co. are confined to six super giant fields, which face relatively high depletion rates of up to 13 percent and a low recovery rate.
"To slow this decline, Iran is in dire need of foreign direct investment," Oxford Analytica noted. "However, successive rounds of sanctions and its own onerous contractual terms have caused significant capital flights.
"Iran's own efforts to invest in upstream production -- $25 billion since March 2012 -- have failed to forestall its eroding capacity."
Iran also has the world's second largest natural gas reserves, after Russia, of 1,116 trillion cubic feet, most of it offshore in the Persian Gulf. But these remain largely under-developed.
The Middle East Economic Digest reports: "The number of international oil companies that have pulled out of the upstream sector has increased and is no longer confined to the large Western oil majors such as Total, Shell and Statoil.
"It now includes the Asian players that were considered more bankable partners by Tehran: Malaysia's Petronas and Amona, the Indian Oil Corp. and Oil India, Japan's Inpex and, most recently, CNPC of China."
MEED said $14 billion had been allocated to the National Development Fund for NIOC for oil and gas development.
"Somewhat optimistically, NIOC had wanted to tap foreign investment to support its fifth development plan, for 2009-14, for development and exploration activities, with a projected spend of $155 billion," the weekly reported.
"Little of that has been forthcoming and the reality is that sanctions are affecting exploration and production efforts."
Oxford Analytica noted, "Even in the unlikely event of a swift resolution to the nuclear dispute, Iran faces long-term damage to its oil reservoirs."
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