International

Sources: Iran and Russia closing in on trade agreement

Deal could possibly undermine Western sanctions that helped persuade Tehran to accept a nuclear compromise

Russian Foreign Minister Sergey Lavrov, left, and Iranian President Hassan Rouhani in Tehran in December.
BEHROUZ MEHRI/AFP/Getty Images

Iran and Russia are negotiating an oil-for-goods swap worth $1.5 billion a month that would let Iran increase oil exports substantially, undermining Western sanctions that helped persuade Tehran in November to accept a preliminary deal to curb its nuclear program.

Russian and Iranian sources close to the barter negotiations said final details were in discussion for a deal that would see Moscow buy up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goods, according to the Reuters news agency.

"Good progress is being made at the moment with strong chances of success," said a Russian source. "We are discussing the details, and the date of signing a deal depends on those details." The Kremlin declined to comment.

"Our desire is to sign the deal as soon as possible," said a senior Iranian official, who declined to be named. "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."

It is not clear whether the deal would be implemented before a nuclear agreement, outlined in Geneva in November between Iran and six world powers, is finalized. Nor is it clear how Moscow will justify to other powers a barter deal that could jeopardize the nuclear negotiations by easing the economic pressure on Tehran.

"It depends on whether the Russians agree to implement this deal before there is a final resolution of the nuclear issues," said Gary Samore, former nuclear nonproliferation czar for President Barack Obama and now an academic and president of the pro-sanctions group United Against Nuclear Iran. "That would obviously be a very negative signal. 

"It could very well be they just want to have this ready to go the day after a nuclear deal is completed and they would then be prepared to execute a barter arrangement."

Russia is one of the countries involved in the nuclear talks but, unlike the United States and the European Union, has not imposed sanctions on Iran.

Technical nuclear talks between Iran and the European Union, representing six world powers, started on Thursday.

The November deal was designed to halt Iran's nuclear advances for six months to buy time for a final settlement by May.

See Al Jazeera America's special U.S.-Iran diplomacy coverage

U.S. and European sanctions have cut Iran's oil exports by more than half over the past 18 months, to about 1 million barrels a day.

Russian purchases of 500,000 barrels a day of Iranian crude would lift Iran's oil exports by 50 percent and provide a major boost to its struggling economy. At current oil prices near $100 a barrel, Iran would earn about an additional $1.5 billion a month.

"Iran has to find a way to accommodate more exports — this is the reason behind this," an Iranian official said. "Both sides should rush for it. Russia will be able to guarantee a large amount of trade with its neighbor, and Iran will be able to overcome its export difficulties."

No details were available about the equipment and goods on offer from Russia.

Given that 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.

Most Iranian oil goes to Asia.

Iran's biggest oil buyer is China, which imported about 420,000 barrels per day in 2013. Unlike Iran's other oil buyers, China has not cut purchases much, despite efforts from the United States.

Other major Asian buyers of Iranian oil — including Japan, South Korea and India — have cut imports sharply under pressure from Washington. Turkey and South Africa have also reduced or eliminated imports.

Al Jazeera and Reuters

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