Without fanfare, China passed the United States in December to become the world's leading importer of oil – the first time in nearly 40 years that the U.S. didn’t own that dubious distinction. That same month, North Dakota, Ohio and Pennsylvania together produced 1.5 million barrels of oil a day -- more than Iran exported.

As those data points demonstrate, a dramatic shift is occurring in how energy is being produced and consumed around the world – one that could lead to far-reaching changes in the geopolitical order.

U.S. policy makers, intelligence analysts and other experts are beginning to grapple with the ramifications of such a change, which could bring with it both great benefits for the U.S. and potentially dangerous consequences, including the risk of upheaval in countries and regions heavily dependent on oil exports. 

But many experts say the U.S. would be the big winner, in position to reshape its foreign policy and boost its global influence. 

"People already are looking at the U.S. differently, seeing the U.S. as much more competitive in the world,” said energy analyst and author Dan Yergin, saying that he first noticed the change in the world view of the U.S. at the World Economic Forum in January in Davos, Switzerland.

Slideshow: Drilling down and out in Texas

Jim Seida / NBC News

Watch a drilling crew at work near the small town of Garden City, Texas, as they drill an oil well that eventually will extend more than a mile deep and a mile sideways in the Permian Basin.

Launch slideshow

As detailed in the first two installments of Power Shift, an NBC News/CNBC special report, the United States is reaping the benefits of an energy boom created by new drilling technologies that have unlocked vast domestic oil and natural gas reserves. Coupled with decreasing demand due to energy efficiency and continued cultivation of alternative energy sources, an increasing number of experts believe the U.S. could achieve energy independence by the end of the decade – realizing a dream born during the gas crisis of 1973.

But who would be the global winners and losers in such a scenario?

Most U.S. policy makers and experts agree that the U.S. and its allies – particularly its North American neighbors -- would be the biggest beneficiaries.

Boom helps Iran sanctions stick
In fact, they say, the West already has realized one major benefit: the success of international sanctions against Iran over its nuclear program.

Carlos Pascual, the State Department’s coordinator for international energy affairs, noted last month at the CERAWEEK energy conference in Houston that increased U.S. oil production, coupled with a boost in exports from Iraq and Libya, has kept oil prices stable despite the loss, because of sanctions, of up to 1.5 million barrels a day in Iranian exports.

“What this has taught us, and helped underscore, is that within the world we live in today, hard security issues and energy policy issues have become fundamentally intertwined,” he said.

NBC News

Interactive map: Where the US produces its energy. Click to enlarge.

Yergin, who also is a CNBC energy consultant and author of the energy-focused nonfiction best-sellers "The Quest" and "The Prize," put it this way: "People talk of the future impact. The increase in U.S oil production has already had an impact: Sanctions wouldn't have been effective without U.S. oil production. …  We've added (within the last year) almost as much as Iran was exporting before sanctions.”

Hossein Moussavian, a former Iranian ambassador to Germany and nuclear negotiator who's now a fellow at the Woodrow Wilson School at Princeton University, said "the radicals" in Tehran failed to foresee the changing energy picture, believing that sanctions wouldn't be imposed and that, if they were, they wouldn't work because oil prices would surge.

"The Iranian mistake was to believe …  the threats of referring Iran to the United Nations Security Council, imposing sanctions, was just a bluff," he said.

In the longer term, observers say that the Organization of Petroleum Exporting Countries (OPEC) and many of its member nations are likely to be the biggest losers if the U.S. continues to cut oil imports, likely decreasing oil prices in the process.

"A dramatic expansion of U.S. production could … push global spare capacity to exceed 8 million barrels per day, at which point OPEC could lose price control and crude oil prices would drop, possibly sharply," the U.S. intelligence community's internal think tank, the National Intelligence Council, said in its “Global Trends 2030” report in December. "Such a drop would take a heavy toll on many energy producers who are increasingly dependent on relatively high energy prices to balance their budgets."

With some analysts predicting that oil prices could drop as low as $70 to $90 a barrel – down from the current price of nearly $110 per barrel of Brent crude oil – a “scramble” among OPEC members for market share could ensue, said Edward Morse, an energy analyst with Citigroup and co-author of a recent report on titled “Energy 2020: Independence Day.”

An International Monetary Fund analysis indicates that many major oil-producing states need more than that lowest price level to meet their budgets and would be forced to increase output or reduce spending, which could trigger unrest. Among them, according to the report: Iran, Libya and Russia, at $117 a barrel; Iraq, $112; Yemen, $237; and the UAE, $84.

Iraq, which has had production from its rich oil fields curtailed by war or sanctions for half of the 53 years of OPEC’s existence, poses another challenge to the organization.

Now that it’s finally free of such interference, its production is increasing by between 500,000 and 900,000 barrels a year, making it the second fastest growing oil-producing country in the world after the U.S. 

“And, by God, no one’s going to impose any quota limitations on them,” said Morse, referring to Iraq’s OPEC partners. “So part of the challenge to OPEC is internal as well as external.”

Can Saudis maintain market-maker role?
Analysts say OPEC heavyweight Saudi Arabia, which controls vast reserves of oil and needs $71 a barrel to meet its budget, according to the IMF, will do everything it can to remain the market-maker. But in that role, it will face new challenges, they say.

“Over time, it should become increasingly challenging for Saudi Arabia to ‘overproduce’ and bring down prices to punish wayward OPEC members; without this disciplinary mechanism, it is unclear whether OPEC can remain cohesive,” according to the Citigroup report.

For its part, OPEC professes to be not unduly alarmed by the U.S. oil and natural gas boom. It highlights the "considerable uncertainties" surrounding wells drilled using hydraulic fracturing, or “fracking,” and associated technologies.

Yergin said he believes that the Saudis will be able to withstand the turbulence, and that they will provide a buffer for the organization’s lesser producers.

“It's too quick to write the obit for OPEC,” he said. “… The Saudis will figure it out. They are re-orientated to Asian markets, turning left instead of right.”

But some members of the oil cartel -- particularly Nigeria and Angola -- already are feeling the impact of the U.S. production surge, according to the Citigroup report. U.S. imports from the two countries dropped to 700,000 barrels a day at the end of 2012, down from 1.6 million barrels in 2007. That’s because U.S. production of light, sweet crude -- the kind of oil the West African nations produce -- has burgeoned in recent years. Citigroup forecasts that by the end of 2013, the market for Nigerian oil at Gulf Coast refineries could entirely dry up.

Longer term, say by 2020, cheaper heavy oil from Canada, freed from the so-called oil sands by new recovery technologies, could push similar oil from Venezuela out of the U.S. Gulf Coast market,  (assuming the Obama administration approves construction of the Keystone XL pipeline to carry it), according to forecasts.

Mexico also is expected to increase production, offering the U.S. access to another convenient and friendly provider.

"The Eagle Ford formation in Texas extends into Mexico and if you look at the Gulf, you'll see thousands of black dots marking oil platforms on the U.S. side but nothing on the Mexican side,” said Yergin. “That's changing. There is a political consensus among the three major parties on energy. You will see less immigration from Mexico. Mexico could become more of a BRIC (the term used for fast-developing economies like Brazil, Russia, India and China) than Brazil."

Besides guaranteeing a stable domestic energy supply, those energy resources add tools to the U.S. diplomatic toolbox, said David L. Phillips, director of the Peace-building and Human Rights Program at Columbia University.

"Why permit ourselves to be held hostage to regimes hostile to our national interests and who give safe harbor to those who would do us harm?" he asked. "… The glaring example is Venezuela. (Hugo) Chavez was so strongly anti-American and he was providing energy to our enemies. They should pay the price for non-cooperation."

Current and former diplomats note that the U.S. also could use its increased natural gas production to weaken rival Russia’s near monopoly on natural gas exports to Europe, via its state-controlled energy giant Gazprom. Already, declining prices fueled by the U.S. boom have benefited the European market.

"What has emerged is a competitive market that allowed the utilities of Western Europe to renegotiate their contract with Gazprom, affecting both prices and financing terms," said the State Department’s Pascual.

Adding to the pressure, the U.S. firm Cheniere Energy last month signed a 20-year deal to export enough liquefied natural gas to the British utility Centrica PLC to heat 1.8 million homes starting in 2018 – the first pact of its kind.

Growth slowing in China, India
As for China and India, both of which are expected to import increasing amounts of energy for years to come, analysts see indications that economic growth is slowing in both countries.

“In a pattern similar to the abrupt slowdown in demand growth seen in the Asian Tigers in the 1990s, Chinese demand growth has slowed to a more tepid 3 (percent) to 5 percent rate as compared to the double-digit growth seen in the early 2000s,” said a Citigroup report by analyst Seth Kleinman released last week.

That slowdown is in part due to the diminishing competitive edge that China enjoys over the U.S., Yergin said.

“Chinese wages are going up 20 percent a year. U.S. energy efficiency and increased production helps the U.S. in the mix on the global competitive landscape, he said, noting that Dow Chemical recently announced it will invest $4 billion in U.S. petrochemical production. “…That doesn’t happen without the U.S. advantage in energy.”

Citigroup's Morse and other analysts said the slowing Chinese economy and energy insecurity could prompt China to more militarization in the Far East -- a dangerous development in a region already beset by nationalist disputes and where the U.S. is expected to focus increasing attention. But none suggests that the Chinese are likely to challenge the United States as a global power, saying Beijing has neither the military assets nor the desire. Its strategy remains regional and attuned to "short-range engagements," Morse wrote.

The impact of the rebalancing of global energy production could be more severe in other nations.

Trevor Houser, a former energy analyst in the Obama administration State Department, worries about the prospect of failed states.

"If you look at the consequences of more U.S. production and reduced sales from OPEC, some would see that as a benefit," said Houser, now a partner with New York-based Rhodium Group, a global market analysis firm. "But starving those economies of oil revenue will surely have disruptive effects. It is not necessarily a good development for U.S. foreign policy and geopolitical stability in general."

AP file/Hassan Ammar

A U.S. F-18 fighter jet, left, lands on the aircraft carrier USS Abraham Lincoln as a U.S. destroyer sails alongside during exercises in the Persian Gulf in 2012.

Houser also said that U.S. energy independence could lead to isolationist policies, but will not insulate Americans from global price disruptions.

"The price Americans pay at the pump will still be determined by events in the global oil market, yet falling U.S. oil imports (are) going to reduce political support for safeguarding those global markets, and no one is willing or able to step up to the plate to replace us,” he said. “... The U.S. economy will still be vulnerable if someone blows up a Saudi port."

More from Power Shift, an NBC News/CNBC special report:

Part 1: Energy boom dawning in America

Part 2:  Oil, gas sector fuels US economy

That issue – specifically, “Do we leave the Middle East once our energy needs are secure?” – came up at the World Economic Forum in Davos, Switzerland, in January, said Yergin, recalling that “an oil minister came up to me and said, ‘Please don’t leave us.’”

Pascual, the State Department official, argues that such fears are overblown.

"These changes in no way change the U.S. commitment to global security, to peace and stability in the Middle East and to security in the transit lanes,” he said, referring to oil shipping routes. “Some people have asked is the United States going to become disinterested. The answer is no. It is absolutely in our self-interest to stay engaged.”

Richard Engel is NBC News' chief foreign correspondent; Robert Windrem is a senior investigative producer. 

Coming next Monday: Digging into the environmental consequences of 'fracking' 

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A Cuban reads a newspaper with articles about the late Venezuelan President Hugo Chavez, on March 6, 2013 in Havana.

HAVANA — Cubans remember the so-called Special Period of the 1990s, when the Soviet Union's sudden collapse plunged the island into years of economic depression, with cars and buses disappearing from the streets for lack of fuel and rolling blackouts leaving the capital in darkness.

Now Cubans fear a return of hard times following the death of Venezuelan President Hugo Chavez, whose billions of dollars of oil largesse helps the island's economy function. Some Havana residents were even talking about hoarding candles on Wednesday.

Francis Gomez, a 22-year-old tourism student from the city of Pinar del Rio, said she was "scared and worried."

"Ever since Chavez became ill, my parents have been saying, 'Please, God, don't let there be another Special Period'," she said.

While Chavez's party remains in power in Venezuela, and his political allies have said they won't change the program, at least not in the short term, a victory by the opposition in a presidential election expected in the coming weeks could change the game entirely. Opposition leader Henrique Capriles has said he would reevaluate the program if elected.

Cubans are not alone in having worries following Tuesday's death of Chavez, who used Venezuela's oil wealth to aid allies through a part-ideological, part-humanitarian program that gives out petroleum at preferential terms.

More than a dozen other countries in Latin America and the Caribbean, many of them economic minnows, have benefited to the tune of billions of dollars from the Petrocaribe pact that was created in 2005 with the goal of unifying the regional oil industry under Venezuelan leadership and countering U.S. influence.

Cuba alone receives about 92,000 barrels of Venezuelan oil a day to meet half its consumption needs, worth around $3.2 billion a year, according to an estimate by University of Texas energy analyst Jorge Pinon.

Havana pays about half the bill through a barter exchange in which tens of thousands of doctors, teachers and other advisers provide services in Venezuela. The rest goes into 25-year credits with 1 percent interest.

"There's no cash exchange. They don't have to write a check. That's the importance of this agreement," Pinon said. "It represents $3.2 billion of free cash flow to the Cuban economy."

"If a new Venezuelan government turns that into a true commercial agreement where in 30 days you pay 100 percent in cash for what you owe, it would be a substantial economic impact to both Cuba and to Petrocaribe countries, no question about that," Pinon said.

Nicaragua, perhaps the second-most dependent on Venezuelan oil after Cuba, gets nearly all its 12 million barrels a year from Caracas, worth about $1.2 billion, said Nestor Avendano, an economist and president of the consulting firm Consultores Para el Desarrollo.

President Daniel Ortega, a staunch Chavez ally, pays about half up-front and finances the rest over 23 years at 2 percent annual interest.

La Prensa, Nicaragua's leading newspaper, noted in an editorial that Ortega has been trying to shore up economic reserves in recent months and raised taxes in January, apparently in anticipation of a reduction in Venezuelan aid.

The Dominican Republic gets just over 40 percent of its oil through Petrocaribe, and saves roughly $400 million a year from the arrangement. Struggling Jamaica, where debt is a whopping 140 percent of gross domestic product, gets roughly two-thirds of its crude through Petrocaribe.

Venezuelan largesse peppers the Caribbean
Across the Caribbean, it's the same story one island nation after another.

"Petrocaribe saved several Caribbean economies from certain collapse," said Anthony Bryan, a senior associate at the Center for Strategic and International Studies in Washington and an expert on U.S.-Caribbean relations.

Nicolas Maduro, Chavez's handpicked successor and a firm ideological ally of Cuba, is seen by analysts as more likely to win the election to replace Chavez. But in the absence of Chavez, who kept his political base in line through pure politics of personality, Maduro might come under pressure as he tries to control factions that don't always agree.

"I think that there's going to be a potential drop in Venezuelan willingness to sell oil (at preferential terms) because Maduro is going to be facing his own internal schisms," said Gregory Weeks, a political scientist specializing in Latin America at the University of North Carolina at Charlotte. "I think he's going to have to be paying more attention to directing resources to his own constituencies at home, rather than abroad."

Weeks added that Maduro would likely try to maintain the Cuba subsidy as much as possible for symbolic reasons, and many analysts say the island is less dependent on Venezuela than it was on the Soviets.

Shortages, inflation at 22 percent
But Venezuela's economy has problems that Chavez's successor will have to deal with. Inflation is 22 percent, dollars for imports are scarce amid currency control and residents complain about sporadic shortages of basic goods.

"Once Venezuela's budget deficit really begins to bite in a way that can no longer be ignored, then the government will have to make some tough decisions in term of spending," said Eric Farnsworth, an energy specialist with the Council of the Americas. "And one of the quickest ways to cut in any country is foreign aid."

For some Petrocaribe beneficiaries that might simply mean tightening belts. For others it could mean rising discontent or even potential unrest as popular social programs wither.

Nicaragua's Ortega, for example, has used the extra cash to put roofs on homes and finance health care and education in a country where 80 percent of the people live on less than $2 a day. Economist Rene Vallecillo said the country could see a 1 percentage-point drop in GDP growth if Venezuelan aid disappeared.

Haiti has used millions in Venezuelan aid to pay for fuel, renovate power stations and build low-income housing in the earthquake-torn nation.

Jamaica has used the 22,000 barrels of Venezuelan oil it got every day in 2011 to produce 95 percent of its electricity.

"If it's 95 percent of your power generation, that has broader implications in terms of your social well-being," Farnsworth said. "They're really going to hurt. ... This has been a lifeline."

Tim Chong / Reuters file

The Delvar, a Malta-flagged Iranian crude oil supertanker, is seen anchored off Singapore on March 1, 2012.

LONDON - Iran is using old tankers, saved from the scrapyard by foreign middlemen, to ship out oil to China in ways that avoid Western sanctions, say officials involved with sanctions who showed Reuters corroborating documents.

The officials, from states involved in imposing sanctions to pressure Iran to curb its nuclear program, said the tankers - worth little more than scrap value - were a new way for Iran to keep its oil exports flowing by exploiting the legal limitations on Western powers' ability to make sanctions stick worldwide.

Officials showed Reuters shipping documents to support their allegation that eight ships, each of which can carry close to a day's worth of Iran's pre-sanctions exports, have loaded Iranian oil at sea. Publicly available tracking and other data are consistent with those documents and allegations.

"The tankers have been used for Iranian crude," one official said. "They are part of Iran's sanctions-busting strategy."

Dimitris Cambis, the Greek businessman who last year bought the ships - eight very large crude carriers, or VLCCs - to carry Middle East crude to Asia, flatly denied doing any business with Tehran or running clandestine shipments of its oil to China.

Cambis said he had not been involved in shipping before but had bought the tankers as part of a new venture he runs from the United Arab Emirates. He denied trading with Iran - though he has contacts there from his previous work in the oil industry.

Related story: Skulduggery at sea: Iran uses tankers off Malaysia to evade oil embargo

He denied his vessels have loaded oil from Iran while at anchor in the Gulf. Known as ship-to-ship transfers, or STS, such movements are hard to track as crews can switch off tracking beacons or not update their recorded positions for periods to conceal that one vessel has come alongside another.

Cambis also explained a stop in Iran by one of his tankers - recorded in publicly available tracking data - as having been only for an emergency repair, not to load an oil cargo.

"There is no Iranian vessel that has done any STS with us," Cambis told Reuters in Athens in response to the officials' allegations of taking oil from Iranian tankers owned by Tehran shipping group NITC. "We have nothing to do with NITC."

The officials involved with sanctions dispute his account and showed documents detailing several ship-to-ship loadings. They said all eight of the tankers were involved in Iran trade.

In one instance in early December, according to the shipping documents shown to Reuters by the officials, an NITC tanker named Marigold loaded Iranian crude onto the Leycothea, one of Cambis's eight ships, while both were at anchor off the UAE emirate of Sharjah. Public tracking showed Cambis's tanker made a call about a month later to Zhanjiang oil terminal in China.

Loading at sea lets vessels pick up a cargo without visiting the country of origin of the crude. Officials allege the tankers are also used as offshore storage for Iranian oil which can then be transferred onward to other ships, concealing its origins.

Officials in Iran, which rejects Western allegations it is seeking nuclear weapons, did not respond to requests for comment.

Muddying waters
Experts on sanctions law said that by operating outside the European Union, ship-owners had no clear obligation to observe rules barring EU companies from buying Iranian oil, though banks and insurers with EU or U.S. business ties are giving a wide berth to firms they suspect of dealing with Iran, given U.S. and EU efforts to penalize such firms within their own jurisdiction. 

"Such ships would be used to delete traces of a trade taking place," a London-based ship broker said.

While Iran has its own substantial tanker fleet, capable of carrying over 72 million barrels, the 2 million barrels that each of the eight tankers can move would be a useful addition to its capacity, analysts said - particularly as their foreign ownership and management could help conceal the Iranian origin of the oil, making it easier to obtain insurance, finance and other ship services that are affected by EU and U.S. sanctions.

Cambis said that between August and November he bought the eight ships: Leycothea, Glaros, Nereyda, Ocean Nymph, Seagull, Zap, Ocean Performer and Ulysses I. The first five are now managed by his firm, Sambouk Shipping, in Sharjah and he is in the process of transferring management of the remaining three.

In other movements indicated by the shipping documents, the Nereyda was also involved in a separate ship-to-ship transfer with NITC's Rainbow in the Gulf in November, while the Glaros took an offshore transfer from the Marigold there in December.

The Nereyda was later recorded arriving at a terminal in China in December. The Glaros appears to have remained in the Gulf since that December transfer, according to tracking data.

Asked about publicly available ship tracking data showing that the Glaros stopped at Iran's Larak Island oil terminal on October 20 last year, Cambis provided what he said was an affidavit by the ship's master describing an emergency repair carried out by Iranian divers when the tanker was headed to Saudi Arabia.

The master, named as I. Bonoutas, could not be reached for comment. Cambis denied loading any oil in Iran. After its stop at Larak, Glaros's next recorded visits, according to ship tracking data, were at Chinese ports between November 24 to December 1.

The eight tankers, built up to 20 years ago, can carry about 16 million barrels of oil among them, shipping databases show.

Iranian crude exports declined to an average of 1.5 million barrels per day (bpd) in 2012, down about 1 million bpd from 2011 levels, data from the International Energy Agency showed.

NITC blacklisted
The eight tankers were bought last year for a total of about $204 million, ship trading sources said - reflecting prices only 3-4 percent above their worth as raw metal. The purchases have been the object of considerable discussion among ship brokers - not least because they would more typically have been broken up.

A ship dealer based in London said, however: "They can carry on trading for as long as people are willing to employ them.

"There's really not much that any authorities can do." 

NITC has been blacklisted by the West and the EU has imposed an outright ban on providing ship insurance that would benefit Iran. The exit from Iran of top providers of ship certification, vital for port access, and the removal of Iranian vessels from international registries have added to operational challenges.

While NITC has expanded its fleet in recent months, experts say access to additional foreign tankers would give Tehran more flexibility in maintaining exports.

"The key word for the Iranians is resistance as in the Supreme Leader's declaration of a resistance economy," said Scott Lucas, a specialist on Iran at Birmingham University.

"This is not an economy which is going to produce growth but it is one which is going to try and avoid a domestic collapse."

More related stories

• Iran bans pistachio exports as sanctions bite
• Naming, shaming: Group targets Iran sanction busters

ALGIERS, Algeria — The U.S. State Department on Monday confirmed that three American citizens were among those killed during the hostage-taking by Islamic militants at a gas field in Algeria.

The death toll from the four-day siege deep in the Sahara has risen to at least 67, Algerian Prime Minister Abdelmalek Sellal said Monday on Algerian televsion. The number includes 38 foreign workers and 29 militants who died in the crisis which came to an end in a bloody confrontation with Algerian forces.

Five foreigners remained unaccounted for, Sellal said.

A Japanese government source said the Algerian government had informed Tokyo that nine Japanese had been killed, the highest toll among the non-Algerians working there.

State Department spokeswoman Victoria Nuland on Monday identified the three Americans who were killed as Victor Lynn Lovelady, Gordon Lee Rowan and Frederick Buttaccio, who had been named earlier.

"We are also aware of seven U.S. citizens who survived the attack," Nuland said. "Due to privacy considerations, we have no further information to provide.

"We will continue to work closely with the Government of Algeria to gain a fuller understanding of the terrorist attack of last week and how we can work together moving forward to combat such threats in the future," Nuland said.

'Blessed operation'
One-eyed veteran Islamist fighter Mokhtar Belmokhtar claimed responsibility for the attack on behalf of al-Qaida.

"We in al-Qaida announce this blessed operation," he said in a video, according to Sahara Media, a regional website. He said about 40 attackers participated in the raid, roughly matching the government's figures for fighters killed and captured.

The fighters swooped out of the desert on Wednesday and seized the In Anema plant and residential barracks nearby.

About 800 people, including some 700 Algerians and 100 foreigners, managed to escape after militants stormed.

Algerian troops launched their first raids on the site on Thursday, but the standoff continued until Saturday, when government forces captured or killed the remaining militants and ended the siege.

According to Salell, the attackers tried to blow up the gas facility on Friday night by planting explosives in a gas pipe and trying to detonate it. The plant produces about 10 percent of the countries gas exports.

The militants demanded an end to French air strikes against Islamist fighters in neighboring Mali that had begun five days earlier. However, U.S. and European officials doubt such a complex raid could have been organized quickly enough to have been conceived as a direct response to the French military intervention.

On Monday, Salell said that a Canadian was one of the coordinators of the attack. Ottawa said it was investigating reports that Canadian nationals were involved.

The siege turned bloody on Thursday when the Algerian army opened fire saying fighters were trying to escape with their prisoners. Survivors said Algerian forces blasted several trucks in a convoy carrying both hostages and their captors.

Nearly 700 Algerian workers and more than 100 foreigners escaped, mainly on Thursday when the fighters were driven from the residential barracks. Some captors remained holed up in the industrial complex until Saturday when they were overrun.

Sellal said negotiating with the kidnappers was essentially impossible.

"Their goal was to kidnap foreigners," he said. "They wanted to flee to Mali with the foreigners, but once they were surrounded they started killing the first hostages."

The bloodshed has strained Algeria's relations with its Western allies, some of whom have complained about being left in the dark while the decision to storm the compound was being taken. Nevertheless, Britain and France both defended the Algerian military action.

"It's easy to say that this or that should have been done. The Algerian authorities took a decision and the toll is very high but I am a bit bothered ... when the impression is given that the Algerians are open to question,'' said French Foreign Minister Laurent Fabius. "They had to deal with terrorists.''

British Prime Minister David Cameron said in a televised statement: "Of course people will ask questions about the Algerian response to these events, but I would just say that the responsibility for these deaths lies squarely with the terrorists who launched this vicious and cowardly attack.

''We should recognize all that the Algerians have done to work with us and to help and coordinate with us. I'd like to thank them for that. We should also recognize that the Algerians too have seen lives lost among their soldiers."

The Islamists' assault has tested Algeria's relations with the outside world and exposed the vulnerability of multinational oil operations in the Sahara.

But physical damage to the gas plant in In Anema was minor, state news service APS reported, citing Oil Minister Youcef Yousfi. The plant would start up again in two days, he said.

Algeria, scarred by the civil war with Islamist insurgents in the 1990s which claimed 200,000 lives, insisted from the start of the crisis there would be no negotiation in the face of terrorism.

France especially needs close cooperation from Algeria to crush Islamist rebels in northern Mali.

Catherine Chomiak, NBC News, Reuters and The Associated Press contributed to this report.

The fate of dozens of hostages seized by Islamists at a gas field in Algeria remained unclear early Friday, hours after the Algerian military stormed the site.

At least six people, and perhaps many more, were killed, The Associated Press reported, and dozens were unaccounted for.

Algerian state media reported Thursday evening that the military operation had ended at the remote desert facility where dozens of workers — including three Americans — had been held hostage. The Algerian government was reported as saying two Filipinos and two British hostages had been killed.

Accounts of the number of hostages and militants killed in the operation differed wildly — ranging from four to 35 — in reports from regional sources cited by The Associated Press and Reuters.

Among those unaccounted for were Americans, Britons, French, Norwegians, Romanians, Malaysians, Japanese and Algerians.

Some of the hostages reportedly escaped from the natural gas pumping plant, near In Amenas, close to the border with Libya and 800 miles from the Algerian capital.

An unknown number of hostages left the country on a charter flight and were expected to land at London's Gatwick airport near midnight Thursday, according to BP, which operates the gas complex. The plane had not arrived as of 3:15 a.m. Friday.

The Islamist militants stormed the plant and workers' housing before dawn on Wednesday seizing up to 41 hostages in one of the biggest international hostage incidents in decades.

The militants have demanded an end to the French military campaign in Mali where ground troops and air forces of the former colonial power are backing Mali's military in offensive against Islamist rebels linked to al-Qaida in that country.

The group that has claimed responsibility for the gas plant raid is said to be led by an Islamic militant called Mokhtar bel Mokhtar, whose nicknames include "The Uncatchable" and "Mr. Marlboro."

According to the AP, militants with the Masked Brigade, a Mali-based al-Qaida offshoot, provided updates through a Mauritanian news organization that said the Algerians attacked when the militants tried to move hostages from the energy complex. The group claimed that 35 hostages and 15 militants died but seven hostages survived the helicopter attack on its convoy.

An Algerian security official says the decision to send forces came because the militants were being stubborn and wanted to flee with the hostages.

U.S. officials called the hostage situation "murky" and said the United States is working with the Algerian government and other affected nations to try to resolve the situation as quickly and securely as possible.

"It's in a remote area of Algeria, near the Libyan border," Secretary of State Hillary Clinton said. "The security of our Americans who are held hostage is our highest priority, but of course we care deeply about the other Algerian and foreign hostages as well."

Clinton said she could not provide any additional information about the situation. 

An Ireland government spokesman said Thursday that an Irish national held at the In Amenas gas plant had "made contact with his family and is understood to be safe and well, and no longer a hostage."

Sky News in London identified the Irish survivor as Stephen McFaul, 46, from west Belfast.

In an interview with the television station, McFaul's father Christopher said he was "delighted" by the news but added he felt "sorry for the other hostages that are still there."

He also described the last 48 hours as "hell".

Stephen McFaul's son, Dylan, also spoke to the Sky reporters: "I can't even explain the excitement. I can't wait until he gets home again," he said, adding that he would tell his father "he's never going back there and I'm not letting him".

A local resident near the plant told Reuters the Algerian military had opened fire and that "many people" were killed.

Faycal Metaqui, a journalist at Algerian newspaper El Watan, told French news channel BFM that he was unable to confirm with authorities the earlier reports that some hostages had escaped.

"Sadly, there have been some reports of casualties, but we are still lacking any confirmed or reliable information," said a statement from oil giant BP, which is a joint owner of the plant.

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Nancy Ing, Jim Miklaszewski and Courtney Kube of NBC News, contributed to this report.

Three Americans were among dozens of foreign nationals kidnapped by heavily armed militants who attacked a gas field in Algeria on Wednesday, U.S. officials said.

A militant group claimed the raid was launched in retaliation for France's military intervention in neighboring Mali, Reuters reported, citing local media.

The hostage situation, described as a "terrorist attack" by State Department spokeswoman Victoria Nuland, was unfolding at a gas operation at In Amenas — a joint venture including oil giant BP, the Norwegian oil firm Statoil and the Algerian state company Sonatrach.

BP said in a statement that the site was "attacked and occupied by a group of unidentified armed people."

Reuters said that according to regional media reports, the raiders killed three people, including a Briton and a French national, but there was no way to confirm the account. Reuters did not report the citizenship of the third person.

Al-Qaida in the Islamic Maghreb, which operates across borders in the Sahara desert, claimed it had captured the workers in retaliation for France's intervention in Mali, Reuters reported, citing regional news agencies.

France has been using Algeria's air space for attacks against al-Qaida linked militants in Mali since last week.

Western government officials had not yet linked Wednesday's attack to the conflict in Algeria's southern neighbor. Algeria and neighboring Mali are former colonies of France.

"The Algerian authorities will not respond to the demands of the terrorists and will not negotiate,'' Interior Minister Daho Ould Kablia was quoted as saying by Algeria's official APS news agency.

One of the kidnappers, reportedly contacted by Mauritania's news agency ANI, warned that any attempt to free the hostages would come to a "tragic end." The militants had placed mines around the site of the kidnapping, according to that unconfirmed report.

The U.S. government is in contact with Algerian authorities, the British Embassy in Algiers, BP's security office in London and the Diplomatic Security office in Washington, State Department spokeswoman Victoria Nuland said in a briefing on Wednesday.

French President Francois Hollande said he was also in contact with Algiers and other governments about the attack.

A picture of who was being held hostage — with various reports that the total number was 41 — remains incomplete, but citizens of at least six countries are in the group.

There are three Americans in the group, a senior U.S. official told NBC. An earlier report had put the number at seven.

The State Department’s Nuland confirmed that Americans were among the hostages, but she would not release names, numbers and other details "in order to protect their safety."

Norwegian Prime Minister Jens Stoltenberg told a news conference that 13 Norwegian citizens were among the hostages. Three Algerian Statoil employees and one Canadian were in the hostage group, the company said. Statoil is a minority shareholder in the venture.

One Irish national was abducted, an Irish government official said, and British Prime Minister David Cameron said "several" British citizens were among the hostages.

A spokesman for the Japanese government said it had set up a task force to investigate reports of Japanese hostages.

A reporter for Japan's NHK television managed to call a Japanese worker in Algeria, Reuters reported. The worker said he got a phone call from a colleague at the gas field.

"It was around 6 a.m. this morning. He said that he had been hearing gunshots for about 20 minutes," the worker said. "I wasn't able to get through to him since."

The U.S. government issued an emergency message to Americans in the country through the embassy in Algiers, warning them to avoid large gatherings, protests or demonstrations.

"U.S. citizens should review their personal security plans, remain aware of their surroundings, including local events, and monitor local news stations for updates," it read, in part. "Maintain a high level of vigilance and take appropriate steps to enhance your personal security and follow instructions of local authorities.

The Amenas gas field is about 800 miles southeast of Algiers and about 35 miles west of the Libyan border.

Oil major BP said it believed the operation had been shut down after the attack, which took place at about 5 a.m. local time. The company said the field had been producing about 160,000 barrels of oil equivalent per day — more than 10 percent of the country's overall gas output, Reuters reported.

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France launches tough ground offensive against Mali's Islamist rebels 

Jim Miklaszewski, Courtney Kube, Ian Johnston, Arata Yamamoto and Alastair Jamieson of NBC News, and Reuters, contributed to this report.

Iraqi Presidential Office / EPA

Iraqi President Jalal Talabani (left), seen with Prime Minister Nuri al-Maliki on Dec. 17, has often mediated between Iraq's various factions.

BAGHDAD — Iraqi President Jalal Talabani has left a Baghdad hospital and is being transferred to Germany for treatment after suffering a stroke earlier this week, his office said Thursday.

The 79-year-old Kurdish statesman was admitted to hospital on Monday night.

He has often mediated among Iraqi Shiites, Sunnis and Kurds, and in a growing dispute over oil between Baghdad and the country's autonomous Kurdistan region.

"Treatment has allowed suitable conditions for his excellency to be transferred outside the country," the statement said, adding that Talabani's health had improved.

It was uncertain whether he would be able to return to his post, and his potential exit from politics is raising concerns about what could be a messy succession battle.

A year after the last U.S. troops left Iraq, the Arab-led central government and the Kurdish region are increasingly divided over oil and land in a rift that threatens to escalate into open conflict.

Iraq President Talabani 'stable' after stroke

Just days before he was hospitalized, Talabani had negotiated between Prime Minister Nouri al-Maliki and Kurdistan authorities after both sent troops to face off along an internal border where they have laid rival claims to ethnically mixed territories.

A year after the last American troops left, the Arab-led central government and the Kurdish region are caught in a rift over oil and land that threatens to escalate into fighting.

Al-Maliki and Kurdistan's leaders have twice sent troops to the internal border where both lay claim to ethnically mixed territories dotted with oilfields.

Turkey is also embroiled in the dispute, angering Baghdad by talking about energy cooperation and oil pipelines that would give Kurdistan a route to export its own crude and effectively end its reliance on the central government's funds.

Blasts hit Iraq's Kirkuk, disputed territories

With oil majors such Exxon and Chevron now shifting their focus northward to sign deals with Kurdistan and away from Iraq's southern oilfields, leaders on both sides are warning of the risks of the dispute sliding into an ethnic war.

"If it erupts ... it will be a painful, shameful ethnic conflict," al-Maliki said warning of the risks following last month's military build-up around disputed towns.

At the heart of the dispute is the oil wealth under the swathe of land known as the "Disputed Territories" along the vague internal border that includes the ethnically mixed city of Kirkuk, known to some as the "Jerusalem of the Kurds.”

Baghdad has warned Exxon and other companies that deals struck with Kurdistan are illegal, a violation of what Iraqi officials see as a policy area that should be under central government control. The Kurds say the constitution's federalism guarantees their right to develop their region's oil resources.

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Hasan Sarbakhshian / AP file

An oil refinery and petrochemical complex is seen in the port of Mahshahr, Iran, in May 2007. A new report says a U.S. and EU oil embargo has severely reduced Iran's oil exports and revenues.

Are economic sanctions successful if the Iranian economy crashes but the regime continues developing its nuclear program? That is the dichotomy now playing out inside the Islamic state, according to new data on the Iranian economy and its nuclear program.

The latest data on the quantitative success of the sanctions comes from an economics research firm, the Rhodium Group of New York. In a paper published last week, Rhodium said that customs data from around the world show both Iranian oil exports and revenues have dropped precipitously.

“As customs data for the month of July rolls in, we’re getting a clearer picture of Iranian exports the first month after new U.S. and EU sanctions formally took effect,” states the report. “And it’s not a pretty one for Tehran.”

Specifically, the report states that the “best guess” on Iranian oil exports in July is no greater than 940,000 barrels per day, down from 1.7 million barrels per day  in June and 2.8 million barrels a day a year ago. Oil revenue dropped even more sharply, from $9.8 billion in July 2011 to $2.9 billion a year later. The disparity between the drop in oil sales and the decline in revenues was partly attributable to tumbling oil prices; even the value China’s oil imports dropped 28 percent from June to July. 

But Trevor Houser, the author of the report and a former senior adviser to the Obama State Department, says the success of the sanctions is surprising even to those who thought them up. “The July decline in Iranian oil exports and revenue is greater than anyone imagined would occur when U.S. sanctions were signed into law at the beginning of the year,” said Houser, a partner at Rhodium Group.  

Iran's currency hits fresh low against dollar as sanctions bite

U.S. and international sanctions -- mainly imposed by the European Union -- constrain a broad range commerce with Iran. They encompass the oil embargo, restrictions on the Iranian banking sector and its ability to carry out international transactions, the importation of industrial and construction equipment, and even luxury goods.

One of the most crippling has been a ban by SWIFT, the international financial clearinghouse, on Iranian funds transfers. Officials say the SWIFT sanctions have been particularly effective in limiting Iranian imports of all sorts of goods, even food supplies. The sanctions are so broad that the U.S. Treasury Department has exhaustive documentation on what is permitted, what is not, as well as licensing requirements.

At the same time, the International Atomic Energy Agency’s quarterly report on Iran’s nuclear program shows while Iranian oil revenue was declining, there was a simultaneous and dramatic increase in the number of centrifuges at Iran’s once-secret Fordow nuclear site. Iran in fact more than doubled the number of installed centrifuges -- from 1,064 to 2,140 -- in May, the IAEA reported.

Iran test-fires missile with new guidance system

The centrifuges, which are not the latest models that Iran possesses, have not been turned on, but U.S. officials call the speedup “troubling” if not a “game changer.” The Iranians also have increased their stockpile of highly enriched uranium, indicating that they have been getting better at the enrichment process.

Finally, at a military nuclear site named Parchin, which the IAEA wants to inspect, crucial buildings had been demolished and earth removed, the IAEA reported. Western diplomats see this as part of a cover-up by Iran of illicit nuclear-linked tests.

'Economic warfare'
So while the shipping data show the sanctions are a quantitative success – causing a rapid deterioration of Iran’s oil-driven economy – the IAEA data suggest no qualitative success. Iran continues to install new centrifuges and enrich more uranium, while refusing to permit IAEA inspections of Parchin.

“The challenge is it (the embargo) doesn’t seem to have much of an impact,” on Iran’s behavior, Houser admits.

CNBC: Iran oil revenue shrinks as sanctions sting

That doesn’t mean sanctions should be abandoned, says Mark Wallace, a former U.S. ambassador to the United Nations who runs an activist group, United Against Nuclear Iran, that’s engaged in shaming Western companies into abandoning business in Iran.

"Sanctions are clearly having an impact, but we can do much more and must,” said Wallace, who advocates “economic warfare” against Iran. “Importantly, the most robust sanctions in history can only prevent Iran from going nuclear if they are part of a larger strategy that includes thoughtful military planning and rigorous diplomatic activity."

Iranians feel the pain of sanctions: 'Everything has doubled in price'

Wallace points to victories big and small. He notes that in the last few days, a Russian firm decided to stop verifying safety and environmental standards for one of Iran's biggest shipping groups, making it more difficult for it to operate internationally.

It’s not surprising that economic sanctions don’t produce an immediate effect, says David Albright, founder and president of the Institute for Science and International Security (ISIS), which monitors nuclear proliferation. They take time.

“It’s a sticky thing with sanctions,” said Albright. “Nothing happens and then suddenly something big happens. It’s hard to predict what's going to happen over next six months as the sanctions tighten.

Slideshow: Everyday life in Iran

At schools, in shops, and on the streets of big cities and small towns, daily life plays out in Iran.

Launch slideshow

“The other part of the story (that Iran continues to make progress on its nuclear program) is true, which is why it’s all immensely frustrating to countries. It argues that ways have to be found to delay Iran from making progress on its nuclear program, because in a sense you need more time for sanctions and that means more covert actions,” like the Stuxnet virus and attacks on Iranian scientists. The former is believed to have been a joint U.S.-Israeli sabotage operation, while the latter is said to be an Israeli secret service initiative.

Israel tells US time is running out for peaceful end to Iran nuclear dispute

Albright also says that the sanctions have to be accompanied by a threat of military action if Iran continues on what the U.S., Israel and other Western nations believe is a path to nuclear weapons.

“The part of it is that it has to be clear in Iran's mind is that the United States will strike militarily to stop them,” he said.  

Iran: 'We can manage this'
Iran’s response has been that it will never give up its “legitimate” right to develop nuclear energy, while steadfastly denying it is working on a nuclear weapons program.

Privately, Iranian officials dismiss the effect sanctions have on Iran’s nuclear policies. They say the effects of the Iran-Iraq War that ravaged the country for eight years in the 1980s -- a war in which the United States covertly supported Saddam Hussein’s regime – were far worse.

 “If we could manage that, we can manage this,” said one official, speaking with NBC News on condition of anonymity.

Asked to estimate the chances that sanctions will lead to Iran ending its uranium program, the official replied, “Zero.”

Other Iranian officials say the sanctions are part of a “secret war” led by the U.S. and Israel that also includes the assassination of Iranian nuclear scientists, infections of Iranian computer networks, drone overflights and even U.S. Special Forces insertions within Iran’s borders.

Iran: We can destroy US bases 'minutes after an attack'

In the face of such provocations, one suggested, how long can Iran decline to respond?

Reprisals could already be under way. Israel has accused Iran of planning or carrying out recent attacks on its diplomatic personnel in Azerbaijan, India and Thailand, as well as orchestrating a bombing that killed four Israeli students on vacation in Bulgaria.

The Iranians strongly deny any role in those plots.

Robert Windrem is a senior investigative producer for NBC News.

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