The Effects of Western Sanctions on Iranian and Russian Energy Economics: Evidence from Scenario Planning Method

Economic sanctions, involving trade restrictions imposed by one country or a group of countries against another, come in various forms, such as tariffs, trade barriers, and import/export restrictions. In recent times, Iran and Russia have become targets of diverse economic sanctions imposed by the Western Bloc. Given that both countries heavily rely on their energy sectors as the bedrock of their economies, this study focuses on assessing the impact of Western sanctions on Iran and Russia's energy industries. Employing the Futurology method (Scenario planning), the research examines the effects of Western sanctions on the energy sectors of Iran and Russia, and explores their respective responses to mitigate these adverse consequences. The findings highlight four potential scenarios for the future of the Iranian and Russian energy sectors, based on two megatrends of sanctions and geopolitical tensions. Among these scenarios, the "Ideal scenario" emerges as the most favorable outcome, while the "Austerity scenario" poses the greatest challenges. Despite the short-term efficacy of these strategies, the study underscores heightened long-term investment risks in both nations. Consequently, foreign investors' participation in the oil and gas sectors of Iran and Russia is expected to decline.