Iran, Russia Negotiating Major Oil-for-Goods Swap: Reuters

Reuters reported today that Iran and Russia are negotiating an oil-for-goods swap worth $1.5 billion a month that would let Iran raise its oil exports substantially.

The swap, if it goes through, would be in defiance of the current Western sanctions. Yesterday, Undersecretary of State Wendy Sherman left nuclear talks in Geneva to visit Moscow. It is unclear if her visit was related to the reported Iran-Russia swap.

The Iran-Russia barter deal would involve the purchase by Russia of 500,000 barrels a day of Iranian crude oil in exchange for Russian equipment and goods.

“Good progress is being made at the moment with strong chances of success,” a Russian source told Reuters. “We are discussing the details and the date of signing a deal depends on those details.” (Reuters, 10 January)

“Our desire is to sign the deal as soon as possible,” an unnamed senior Iranian official also told Reuters. “Our officials are discussing the matter with the Russians and hopefully it will be inked soon, regardless of whether we can reach a (nuclear) agreement in Geneva.”

Under the current sanctions regime, Iran’s global oil exports have been reduced to around 1 million barrels a day. The 500,000 bpd deal with Russia lifts it by 50% and will provide a major boost to Iran’s economy. At current oil prices near $100 a barrel, Iran would earn about an additional $18 billion a year. (Reuters, 10 January)

Given Russia is a major oil exporter the Iranian oil would likely be exported from Iran on Russia's account, with Russian goods and equipment bartered in exchange. But the deal would also mean that Russia will become the main broker of Iranian crude oil.