Beijing has cut the crude…
Asked by CNBC’s Hadley Gamble…
The recent breakdown in cooperation between Russia and the West has seen Russia trying to rebuild its economic relationship with Iran after a dry spell brought about by Moscow’s cooperation on international sanctions. The Wall Street Journal reports that Russian and Iranian officials met on April 27 to discuss deals on electricity worth over $10 billion.
In recent years, the U.S. has gone to great lengths to keep Russia in the international fold as it confronted Iran over its suspect nuclear program. Despite having a long history of economic partnership with Tehran, the Kremlin cooperated with the other permanent members of the United Nations Security Council and Germany (the P5+1) to enact painful sanctions on Iran.
Now, with U.S.-Russian relations hitting a multi-decade low, Russian President Vladimir Putin appears less inclined to keep up the pressure on the Islamic republic. Russia and Iran are in talks over swapping Iranian oil for goods and food supplies, which could be worth up to an estimated $20 billion. The deal would see Iran exporting 500,000 barrels of oil per day to Russia, a move that U.S. officials have said would violate sanctions. The two countries are also discussing power deals, including the construction of hydroelectric dams and the export of Russian electricity to Iran.
Related Article: Russia Loses Leverage with China on Gas Deal
The pending deals are being seen as potentially undermining to the carefully structured sanctions that have been widely credited with forcing Iran to the negotiating table. If the Iranian economy gets a lifeline from Russia, the U.S. could lose leverage in talks with Iran over a final resolution to its nuclear program.
The P5+1 nations agreed to a six-month temporary deal that relieved some pressure on Iran in exchange for a freeze of the Iranian nuclear program. The two sides have set a July deadline for a longer-term deal.
Meanwhile, Iranian officials are quietly cautioning Russia against dismissing how damaging sanctions can be, as Russia itself becomes the recipient of economic sanctions from the West over its role in Ukraine. The Wall Street Journal reports that many top Iranian officials and businessmen have been surprised to realize just how devastating sanctions have been on their own country.
By James Burgess of Oilprice.com
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…