Following the news of the agreement reached between Iran and the world powers regarding the country’s nuclear program, Reuters on Jan. 10 published unofficial information obtained from unnamed sources in Iran and Russia about a deal in the works to exchange Iranian oil for Russian goods.
The sources of the leaked information reported an agreement to provide 500,000 barrels of oil per day (25 million tons a year) in exchange for Russian equipment and goods. This is a substantial amount of oil. For comparison, it is about the same as the entire daily oil production of Ecuador (which, although the smallest producer, is still a member of the Organization of Petroleum Exporting Countries [OPEC]). As a result of the sanctions by the United States and the European Union initiated in 2011, Iranian oil exports decreased from 2.5 million barrels per day to their current level of 1 million, so for Iran a deal with Russia would mean a 50% increase in exports.
The leaked price was $1.5 billion a month, or approximately $100 per barrel, the current market price. Compared with the $7 billion overall Iran will gain from the partial lifting of sanctions, this looks like a much more attractive alternative.
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