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Amid Tension With Russia, Belarus Signs Deal With Iran

Oil Refinery

This month—for the first time in the East European country’s history—Belarus signed a contract to purchase crude oil from the National Iranian Oil Company.

A row between the former Soviet state and Russia over oil prices caused the latter to cut energy exports to Belarus in the second half of 2016, leading Minsk to approve energy purchases from Iran. Moscow is still threatening further cuts, which could mean more contracts making their way to Tehran, a country with which Russia has allied geopolitically.

The issue began when Belarus complained of the $132 per 1,000 cubic meters rate set by the Russian company Gazprom. Minsk started underpaying for the gas shipments. Moscow says it is owed roughly $300 million due to the serial underpayments.

Over the course of the current diplomatic tensions with Russia, Belarus has bought Azerbaijani blends, but the importer stopped the transactions in search of a sour grade to replace Ural blends.

Belarus’ supplies from Russia are down six million tons (from 24 million to 18 million) from planned levels due to Moscow’s punitive measures, which could double in severity this year if an agreement is not reached soon, Belarus President Alexander Lukashenko has said.

The lifting of international sanctions against Iran in January 2016 has allowed the Middle Eastern country to re-enter global energy markets and reclaim its position as the third-biggest producer of oil in the Saudi-led Organization of Petroleum Exporting Countries (OPEC).

Related: U.S. Rig Count Rises As Crude Inventory Levels Hit Record High

Iranian and Russian oil interests have been at odds with one another in Poland as well. Last August, reports spread that Poland had been plotting to replace Iran with Russia as its main fuel source, though traders had noted at the time that a shipment of two million barrels of Iranian crude was heading to the Polish port of Gdansk.

By Zainab Calcuttawala for Oilprice.com

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  • Bud on February 17 2017 said:
    Zainab, thanks for the info, assume they are trans shipping via Poland as well?

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