Late last year, Vladimir Putin had come to an agreement with the leaders of Iran as a means to avoid the energy sanctions put on Russia by the West. According to the report, this five-year agreement would allow Russia and Iran to work together in the oil and gas industry in what amounts to an oil for goods swap. The deal would be to provide machinery, grain, consumer goods, and to help construct power plants in exchange for Iranian oil. Rumors of this deal have been swirling for several months, but it is difficult to discern the truth of the matter.
Despite these reports and the concern they cause, Iran’s oil minister said that the two countries are not actually close to this sort of agreement. A quote from the minister says, “The idea of bartering Iranian oil in return for Russian commodities is not true and such an agreement has never taken place between the two countries.” However, he went on to say that Iran and Russia are in talks, and that they have met and agreed on “bilateral cooperation in oil and gas industries, based on which Iran will take advantage of Russian firms’ technical and operational capacities in its oil and gas industries.”
It’s difficult to know exactly what to believe though, as other sources said that the countries were actually talking about a deal amounting to $20 billion where Russia would buy half a million barrels of oil from Iran a day in exchange for the aforementioned machinery and goods.
Both of these countries are under sanctions. The two of them working together in this manner would negate the effectiveness of those sanctions, and this is a cause for concern in the US and other Western countries. Naturally, this has the potential to cause more stress and strain on the already fragile relationship that Russia has with the West. The crisis in Ukraine has been a sticking point, and the sanctions were in place to hopefully force Russia’s hand. However, if they start to work with Iran, there would be no need to back off from their current tactics in Ukraine.
The US has said that these talks could lead to further sanctions on these two countries. It’s unclear what will happen right now, but those with an interest in the oil and gas sector, as well as the world economy, will be keeping a close eye on what’s happening.
Source: The Telegraph
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