Russia announced earlier this week that it had agreed a five year deal with Iran worth approximately US$ 20 billion (£11.8 billion). Under the terms of the deal Russia would buy up to 500 000 bpd of Iranian crude oil in exchange for Russian equipment/goods.
On Tuesday, Russian Energy Minister Alexander Novak and Bijan Zanganeh, his Iranian counterpart, signed a memorandum of understanding.
Novak said: “Based on Iran’s proposal, we will participate in arranging shipments of crude oil, including to the Russian market”.
However, the Russian government later withdrew their statement, offering no reason for doing so.
According to the Telegraph, despite the U-turn, US markets have responded. The Dow fell 139 points, led by energy companies such as Chevron and ExxonMobil.
The EU had recently implemented a number of measures to restrict certain oil products and oil drilling in Russia due to its annexation of Ukraine and the involvement of rebels sympathetic to the Putin government in the gunning down of Malaysia Airlines Flight MH17, which led to the death of 298 people.
Meanwhile, Iran faces sanctions over its controversial nuclear programme. According to Reuters, these sanctions have reduced Iranian oil exports to approximately 1.0 – 1.5 million bpd, compared to 2.5 million bpd before the sanctions were imposed.
The announced deal represented a great opportunity for both nations given how Western sanctions are affecting their energy sectors. Russia has indicated that a new statement will be issued shortly.
Written by Emma McAleavey.
Read the article online at: https://www.oilfieldtechnology.com/exploration/06082014/russia-iran-oil-deal-1085/