Russia & Iran drop dollar trade by extending oil-for-goods supply agreement

The first delivery of Iranian crude oil to Russia under the oil-for-goods program has been completed and the sides aim to extend the deal for five years, according to Russian Energy Ministry Aleksandr Novak.

“The agreement is effective; it has been extended for the year, but in general, we think it should be extended for five years,” he said.

The oil-for-goods deal was initially reached in 2014 when Iran was under Western sanctions over its nuclear program. Last year, Moscow and Tehran ratified the agreement, under which Russia would initially buy 100,000 barrels a day from Iran and sell the country $45 billion worth of goods.

Current Iranian oil supplies under the program amount to five million tons per year. The first delivery was made in November 2017 and totaled one million tons.

Novak said earlier that the oil-for-goods program was expected to boost trade between the two countries. The nations have also signed six provisional agreements to collaborate on “strategic” energy deals worth up to $30 billion.

Presidential aide Yuri Ushakov said this month that Russian investment in developing Iran’s oil and gas fields could total more than $50 billion.

According to Ushakov, Iran may enter the Russia-led Eurasian Economic Union (EEU) within months. The free-trade zone deal is expected to “trigger further development of our bilateral trade and expansion of investment cooperation.”