• 5 hours Conflicting News Spurs Doubt On Aramco IPO
  • 7 hours Exxon Starts Production At New Refinery In Texas
  • 8 hours Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 1 day Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 1 day Oil Gains Spur Growth In Canada’s Oil Cities
  • 1 day China To Take 5% Of Rosneft’s Output In New Deal
  • 1 day UAE Oil Giant Seeks Partnership For Possible IPO
  • 1 day Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 1 day VW Fails To Secure Critical Commodity For EVs
  • 1 day Enbridge Pipeline Expansion Finally Approved
  • 1 day Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 1 day OPEC Oil Deal Compliance Falls To 86%
  • 2 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 2 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 2 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 2 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 2 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 2 days Aramco Says No Plans To Shelve IPO
  • 5 days Trump Passes Iran Nuclear Deal Back to Congress
  • 5 days Texas Shutters More Coal-Fired Plants
  • 5 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 5 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 5 days Chevron Quits Australian Deepwater Oil Exploration
  • 6 days Europe Braces For End Of Iran Nuclear Deal
  • 6 days Renewable Energy Startup Powering Native American Protest Camp
  • 6 days Husky Energy Set To Restart Pipeline
  • 6 days Russia, Morocco Sign String Of Energy And Military Deals
  • 6 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 6 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 6 days India Needs Help To Boost Oil Production
  • 6 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 6 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 6 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 6 days District Judge Rules Dakota Access Can Continue Operating
  • 7 days Surprise Oil Inventory Build Shocks Markets
  • 7 days France’s Biggest Listed Bank To Stop Funding Shale, Oil Sands Projects
  • 7 days Syria’s Kurds Aim To Control Oil-Rich Areas
  • 7 days Chinese Teapots Create $5B JV To Compete With State Firms
  • 7 days Oil M&A Deals Set To Rise
  • 7 days South Sudan Tightens Oil Industry Security
Alt Text

Trump Just Made Iran A Wildcard

The impact of Trump’s decision…

Alt Text

Kurdistan Accuses Baghdad Of Planning Oil Field Seizure

Kurdistan authorities have accused the…

Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

More Info

Russia Using Iran Nuclear Deal To Expand Sphere Of Influence

Russia Using Iran Nuclear Deal To Expand Sphere Of Influence

The nuclear deal between Iran and the P5+1 nations could lead to a flood of new oil hitting global markets. That could result in a significant drop in oil prices. While that would be damaging to Russia – already reeling from low prices – the Kremlin apparently believes an expanding presence in the Middle East outweighs the potential crude price collapse.

The Energy Information Administration projects that a successful conclusion of negotiations in June that would result in a removal of sanctions on Iran could lead to a $5 to $15 per barrel price decline for oil in 2016. That would mean, according to the EIA, its forecast of $75 for Brent in 2016 could conceivably drop back down to $60. Related: Resource Dependence Could Prove Fatal For Canadian Economy

Russia already forecasts a budget deficit of $46 billion this year and a contraction in its GDP of 3.7 percent. Lower than expected prices for 2016 would prolong and deepen the pain.

On its face, that would suggest Russia would not see a whole lot to gain from allowing a competing oil exporter to return to the fold. Iran could ramp up oil exports by 1 million barrels per day, which Russia’s central bank forecasts could result in a $27 billion fall in Russian revenues.

But the Russian government seems to think the loss of revenues from a potential fall in oil prices will be made up for by increased trade with Iran and other strategic gains in the Middle East.

Russia has had an active relationship in Iran in the past. Gazprom Neft, the state-owned oil firm, signed a memorandum of understanding with the National Iranian Oil Company in 2009 to develop oil fields in Iran. The relationship fell apart after delays, in part due to Gazprom’s fear of sanctions. Prior to the sanctions, Gazprom’s CEO Alexei Miller had worked towards building a long-term energy relationship with Iran, meeting with former Iranian President Mahmoud Ahmadinejad. Gazprom helped develop parts of Iran’s giant South Pars gas field, and even considered Iranian gas as a potential source of supply for Russia’s now-defunct Nabucco pipeline. Related: U.S. Seizes On Venezuelan Weakness To Regain Caribbean Energy Foothold

International sanctions put the relationship on hold. Russia backtracked on a plan to sell S-300 surface-to-air missiles in 2010, banning sales to Iran after international pressure. However, that issue roared back to life on April 13, 2015 when Russia lifted its ban on S-300 sales to Iran, to the howls of the United States and Israel. Although the move will only give ammo to U.S. hardliners opposed to any nuclear deal with Iran, Russia’s Foreign Minister Sergei Lavrov said the move was in the “spirit of goodwill,” citing progress in negotiations. He emphasized that its ban was self-imposed and did not fall under any United Nations’ action. But Russia is merely trying to get a leg up on new business with Iran, eyeing a final deal in June. A top Iranian official said that he believes Russia will deliver the missiles sometime this year.

Russia’s move to sell missiles to Iran comes after news in February that Rostec, a Russian state-owned defense company, offered to sell Iran Antey-2500 anti-ballistic missile systems. Russia has also agreed to swap oil for goods with Iran, another piece of evidence suggesting Russia is prioritizing business ties with Iran ahead of the nuclear deal. And of course, Iran has long used Russian nuclear technologies at its nuclear facilities, and if the international community greenlights some nuclear activity in Iran, Russia would also seize on the economic opportunities. Related: Why Cheap Natural Gas Could Be Here To Stay

A stronger trade relationship with Iran will build on Russia’s other overtures in the region.

Gazprom recently agreed to ship 35 cargoes of LNG to Egypt over the course of five years. Egypt is suffering under an acute and growing energy crisis, and expects to pay $3.55 billion for LNG imports between 2015 and 2016. Russia is capitalizing on this, expanding its relationship with Egypt through the energy deal.

Gazprom Neft is also surveying oil fields in the Kurdish region of northern Iraq, where most of the company’s Iraqi projects are located. Fellow Russian oil firm Lukoil operates in southern Iraq near the giant oil fields of West Qurna-2 near Basra. In both Iraq and Iran, Russian oil firms have picked up the pieces that western companies left behind when they were forced to leave after war and sanctions.

With Russia’s neighbors in Europe becoming increasingly inhospitable, the Kremlin is looking to the Middle East and China to expand its trade and influence. While the West may not like it, Russia is not waiting for the nuclear deal with Iran to be finished before it expands its economic presence in the region.

By Nick Cunningham Of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News