Russia and Iran has entered into an oil-for-goods swap that will allow Iran to ship out oil and in exchange for equipment and goods. Russian Energy Minister Alexander Novak and Bijan Zanganeh signed a memorandum of understanding. It has no details and is a tentative deal. But experts say it is Russia’s response to Western sanctions. “The memorandum provides for the expansion of trade and economic cooperation in the fields of construction and reconstruction of power generating capacity, the development of power grid infrastructure, the oil and gas sector, as well as the supply of machinery, equipment and consumer goods,” the Russian Ministry of Energy said. It is noteworthy that negotiations have been underway for three years, but was fueled up by the recent geopolitical issues. Sources say the deal would amount to $20 billion.
Thus, Iran would supply about 500,000 bpd to Russia within 2-3 years. According to Russian Deputy Energy Minister Anatoly Yanovsky, it is too early to talk about details, including providers, volumes of oil supplies will be and so on. “What we have now is the scheme with both parties willing to supply the greatest amount of goods and services from Russia to Iran. Meanwhile, the Iranians will provide some volume of crude oil in exchange. We haven’t yet decided on the volume. Every party can abandon the deal and if they do, penalties are out of the question”, he said.
In its turn, the U.S. has heavily criticized Russia. Treasury Secretary Jacob Lew warned his Russian counterpart Anton Siluanov against violation of the U.S. sanctions. However, experts say that amid current circumstances, Russia's foreign policy to expand economic cooperation with the countries of Asia and the Middle East is justified.
