Analysis by Energy Workforce SVP Government Affairs & Counsel Tim Tarpley
Recent meetings between Iran and Russia should raise some eyebrows for those watching the international energy markets. In recent weeks, Iran sent two official delegations to Moscow focused on energy and finance, including Iranian central bank chief Ali Saleh-Abadi, Deputy Economy Minister Ali Fekri, and the head of the Iranian legislature’s economy committee, Mohammad Reza Pour Ebrahimi.
The principal attraction of Iran to Russia is likely that it can be used as a back-channel way to sell Russian oil if the Iran nuclear deal is signed, and Iranian oil can once more be sold into the international markets. Russian oil exports have essentially been shut off by the EU and the U.S. since December. However, post Iranian deal, Iran could feasibly import Russian crude to its northern coast and sell the equivalent amount of crude on tankers leaving Iran. Iran could in turn refine Russian oil to satisfy its own domestic markets.
The prospects of a finalized Iranian nuclear deal is growing increasingly possible, with the U.S., Russia and EU officials pushing hard for a deal. Given Russia’s involvement, we can be assured that there should not be last minute efforts to block any potential future Russia-Iranian crude swap deals. By the same token, the Russia-Ukraine conflict appears to have reached a stalemate with the introduction of NATO long-range artillery to the Ukrainian side. Short of removal of Putin as Russian President, the conflict could be expected to continue for many months or even years.
We can expect Russia to continue to look for new markets (outside the U.S. and EU) to sell its crude, along with swap deals with non-aligned countries like Iran. The upcoming winter, and potential energy shortages in Europe, may have significant impact on U.S. and EU policies in the area.
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Tim Tarpley, SVP Government Affairs & Counsel, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.