Whether the dual policies are a power struggle over resources themselves or a way to punish or reward, the need for energy and the related economic and development consequences are ever present.

"Post-Cold War, there are common interests, even between the United States and Iran, certainly between the United States and other Gulf states," said James Placke, senior associate and Middle East expert at Cambridge Energy Research Associates. "Security interests are still a very important part of it; energy interests are still a very important part of it. Whether the United States gets most of its oil or only a small portion -- and it is a small portion -- from the Gulf region really doesn't matter. There's one oil market and in the supplies to the world market from the Gulf are absolutely critical, and that's what's important to the United States."

Placke, who spent three decades in top posts at the U.S. State Department and Foreign Service, was speaking at a panel at CERAWeek, the world's largest annual energy conference.

Placke pointed to U.S. attempts to keep the Soviet Union from oil and gas, while attempting to shore up as many dedicated supplies as possible. Now, the Bush administration's enemy No. 1 is Iran. And, couched in fears Tehran is attempting to build nuclear weapons capabilities, Washington is leading the charge for even more sanctions.

"In case of Iran, yes energy policy and foreign policy are two sides of same coin, but in a rather perverse way," Placke said. "That's a way of getting Iran to pay a price in the hope that there will be more of an accommodation to the requirements of the international community than there has up until this point."

The U.N. Security Council has approved two sets of sanctions -- nothing new is likely before next month's International Atomic Energy Agency report -- which have had limited impact, said Bijan Khajehpour, chairman of the Iran-based Atieh Bahar Consulting.

"What has had a severe impact on Iran is the unofficial U.S. sanctions" by pressing banks and international companies not to invest. "Right now Iran is very much irritated by U.S. sanctions and if those continue, the opportunity for improved relationship will not be there so easy."

Domestic politics are more focused on the economy than on international relations, Khajehpour said, with inflation, unemployment and gas shortage issues top of the society's agenda. This, however, is not the result of sanctions but internal economic approaches, he added.

Iran's neighbors have their own unique energy-foreign policy blend.

U.S. and Saudi Arabian relations are storied, the latter a former top supplier of oil to the United States and still the largest producer in the world, and Washington ensuring security ties. While its troops have left Saudi Arabia, U.S. forces are in Kuwait, Bahrain, Qatar, United Arab Emirates and Oman.

Now Saudi Arabia is questioning whether the downturn in the U.S. economy is negatively affecting its economy. Since the mid-1980s, its currency has been pegged and exchange rate fixed to the U.S. dollar, but a producer at today's oil prices would prefer interest rates going up, not down as in the United States, said Brad Bourland, head of research and chief economist at Saudi-based Jadwa Investment.

"Back in the 1970s this wasn't a political issue, it was very much, not much of an issue at all," he said. "Today because of the nature of the strained relationship -- 9/11, focus on Saudi Arabia and the United States, plus what's happening globally with Chinese delinking from the dollar, sovereign wealth funds investing in the West, capital flows -- all of this has made it a big issue. So now if Saudi Arabia were to do anything with its dollar relationship it will be seen as having very large political dimensions and a political message to it."

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