Representatives of the Russian and Iranian governments met in Tehran yesterday for the 11th meeting of the Iran-Russian Trade Council, where details of a ground breaking oil-for-goods swap between the two heavily sanctioned countries were revealed.
With both countries now sanctioned by the West, Russia and Iran have been in extensive negotiations on how to facilitate Iranian oil exports without breaching the UN Security Council nuclear deal that was agreed between Iran, Germany and the five UN Council permanent last January.
Sanctions on Iran had reduced Iranian oil production from 2.5 million barrels per day (BPD) down to between 1 million - 1.5 million BPD. Under the UN’s nuclear deal, Iran can only now export up to 1 million BPD. Iran has the world’s 4th largest oil reserves and both Russia and Iran are large producers and exporters of oil.
On August 5, Russia and Iran signed a Memorandum of Understanding (MoU) on oil-for-goods exchanges under which Russia could take 500,000 BPD of Iranian oil exports in returns for providing goods, services and equipment to Iran. This deal was said by Russian media to have been directly negotiated previously by Russian President Vladimir Putin and Iranian President Hassan Rouhani.
Yesterday in Tehran, details of one of these oil-for-goods deals became apparent, when an oil-for-power-plants was announced as part of a wide ranging economic cooperation agreement that was signed between the two parties. The trade agreement is said to be worth up to €70 billion.
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