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Russia And Iran Put Oil-For-Goods Deals Into Motion As Iran Signals Similar Arrangements Coming With China
Russia-Iran Oil-for-Goods Contracts
Representatives of the Russian and Iranian governments met in Tehran yesterday for the 11th meeting of the Iran-Russian Trade Council, where details of a ground breaking oil-for-goods swap between the two heavily sanctioned countries were revealed.
With both countries now sanctioned by the West, Russia and Iran have been in extensive negotiations on how to facilitate Iranian oil exports without breaching the UN Security Council nuclear deal that was agreed between Iran, Germany and the five UN Council permanent last January.
Sanctions on Iran had reduced Iranian oil production from 2.5 million barrels per day (BPD) down to between 1 million - 1.5 million BPD. Under the UN’s nuclear deal, Iran can only now export up to 1 million BPD. Iran has the world’s 4th largest oil reserves and both Russia and Iran are large producers and exporters of oil.
On August 5, Russia and Iran signed a Memorandum of Understanding (MoU) on oil-for-goods exchanges under which Russia could take 500,000 BPD of Iranian oil exports in returns for providing goods, services and equipment to Iran. This deal was said by Russian media to have been directly negotiated previously by Russian President Vladimir Putin and Iranian President Hassan Rouhani.
President Hassan Rouhani of Iran meeting with Russian President Vladimir Putin
Yesterday in Tehran, details of one of these oil-for-goods deals became apparent, when an oil-for-power-plants was announced as part of a wide ranging economic cooperation agreement that was signed between the two parties. The trade agreement is said to be worth up to €70 billion.
According to the Russian news agency ITAR-TASS, the power plants deal will consist of Russian energy engineering company TECHNOPROMEXPORT providing services for the construction of seven thermal power plants by 2017 in return for oil supplies to Russia. TECHNOPROMEXPORT had already negotiated their deal with Iran earlier this summer. It was only the payment terms that had not been revealed.
According to the Iranian Fars news agency, current Iran-Russia trade was worth $5.1 billion in 2013, and the new wide-ranging Russian projects will include construction and renovation of Iranian power plants and power grids, as well as other transportation and aviation projects such as possibly relocating the production and assembly of Aviastar-SP Tuplolev TU-204 passenger aircraft to Iran.
Russian energy minister Alexander Novak, who attended the talks and signed an agreement with Iranian oil minister Bijan Namdar Zanganeh, said that “Iran and Russia had intensively worked to remove obstacles such as method of payment for trade exchanges”.
Russian Energy Minister, Alexander Novak
ITAR-TASS said that one of the existing impediments to the supply of Iranian oil to Russia has been “problems in organising interbank settlements”.
It was also revealed yesterday that TECHNOPROMEXPORT will be involved in the construction of electric power plants in Iran along with Inter RAO. In fact, yesterday a number of MoUs were signed between the two countries in the areas of oil and gas, petrochemical, mining and other industries.
Although the 500,000 BPD of Iranian oil exports to Russia does not breach the UN limit, it will be seen by the White House as a threat to the US led sanctions. With further sanctions of its own, Russia now appears to be beginning to move its own chess pieces.
Last month the Russian business daily newspaper Kommersant quoted Russian policy expert Andrey Baklitsky as saying “Russia, at present, is far less disposed to heed US recommendations”. Baklitsky thought that with sanctions on its own oil industry, Russian is less worried about violating Iranian oil sanctions.
Russia doesn’t necessarily need Iranian oil imports and these could easily be re-exported to other countries including China. Iran is China’s third largest supplier of crude oil.
On Monday at a separate press conference at the oil ministry in Tehran, Fars news agency quoted deputy oil minister Mansour Moazzemi as saying that “Russia is Iran’s strategic partner and we will cooperate with them in any area we can, including oil.”
Moazzemi also said that “We have started a serious job with the Chinese and Russians (in the energy sector) in such a strong way that the oil minister has now been appointed as the head of Iran-Russia joint economic commission instead of the foreign minister.”
Moazzemi then elaborated “We have also started a serious job with the Chinese which will be revealed to the public in the future.”
As the world powers square up over sanctions and energy reserves, while using oil-for-goods deals to bypass US dollar settlement for oil transactions, the geo-political ramifications for the status of the US dollar as the world’s reserve currency look to be on increasingly shaky ground.
A breaking of the stranglehold of the dollar on international oil transactions could usher in a number of transaction substitutes such as the Euro, the Yuan, and also the international currency of gold.
MARKET UPDATE
Today’s AM fix was USD 1,254.25, EUR 968.46 and GBP 779.91 per ounce.
Yesterday’s AM fix was USD 1,256.00, EUR 974.78 and GBP 779.79 per ounce.
Gold climbed $0.90 or 0.07% to $1,256.50 per ounce and silver rose $0.06 or 0.32% to $19.09 per ounce yesterday.
In morning trading, gold weakened marginally to $1,253 in London, down 0.22% from yesterday’s New York close. In overnight Asian trading today, gold ended at $1,257.10 in Singapore. Yesterday gold weakened and had touched $1,247.60 before recovering. Silver fell 0.52% to $18.95, down from $19.05.
Palladium has fallen substantially, losing 2.84% to $856, while platinum weakened, but less so, falling 0.71% to $1,385.
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Death of the Dollar bla bla bla .. And who else in the World are you going to trust with your excess trillions? The Chinese and the Russians? Please, stop make me laugh ...
Putin demonstrating the ability and right for freedom of trade for any nation. Not such a bad thing?
Too many people it appears a struggle is occurring to unseat America as the worlds most dominate nation. For many proud Americans who see the world from the unenlightened and possibly undefendable position of the United States having a right to be in control it is both threatening and frustrating to see control slip away.
It is threatening to think the country might quickly fall to the position of a second rate power mired in debt with many of the options we have come to see as our right suddenly ripped away. It is frustrating that in many ways the country has become its own worse enemy guilty of political inaction and squandering its power through a series of bad choices and missteps. More on this shift in power and our best response in the article below.
http://brucewilds.blogspot.com/2014/06/americas-struggle-to-stay-on-top....
r u a NAZI? exceptional and indispensible.
......to unseat America as the worlds most dominate nation.......
That is a just reward for voting the same people into power.
I hope that in the end, when the alternatives are all exhausted, Americans will do the right thing and stage a revolution against the banksters. Until then, they have close to zero sympathy from me.
What will it take for Russia to walk away from the UN resolution that blocks them from delivering the antiaircraft missile systems Iran contracted and partly paid for?
It's a problem. Russia needs to be able to protect Iran to keep it close, but transferring the missile systems would be taken as a provocation.
And what would the US do in retaliation? Blow up a few mud huts somewhere?
The eagle has lost its talons, and the more arrogant it becomes, the bigger the blowback will be.
You all see that, gold up .90!
I vote for the one not in the Halloween costume.
Interesting that Russia will penalize Poland and eventually Slovakia and others when they reverse gas and sell it to Ukraine while doing the exact same thing with Iran.
Oh well..... Actually, not quite sure if selling is the correct term, since Ukraine will probably not pay.
The DXY is sticking up like a boner in a leatard and about to get blue ballz
"Gold CLIMBED $0.90 or 0.07%".
The wording is ridiculous, as is often the case with GoldCore.
Call us when gold climbs 7%.
This should have come about 40 years ago. The Russians really thought that the West would welcome them as equal partners. Fat chance!
I guess that it is only a matter of time before the WTO bites the dust and all these American companies that make a good living out of its rules have to find a new business model.
Putin has not forgotten. The West humiliated Russia and sent their zio-pirates to loot Russia.
Some of this is going on in the Ukraine right now. The NovoRussia military commander said construction companies are showing up and other companies angling for mines and other ukraine resources and industry including Hunter Biden.
"So let us start by valuing a single potato and go from there."
"Yes! Excellent! We will begin by valuing all our goods relative to single potato! But nooooooo Vodka!" (mutual laughter, guffaws.)
Next up: "the actual versus the implied value of a single French Fry."
First, tell me, do you actually possess the physical french fry?
You know I've been thinking this stupid ass sanction business is meant to hurry along the death of the dollar. China, Russia, and the BRICS finish the work and usher in the new SDR type system and the US regime gets to play like, hey it wasn't our fault. This regime if not incompetent is most certainly evil.
Agreed. I get tired of the US govts are morons or incompetent. They are evil.
I hope Russia, Iran and China stand behind Syria. What the west is doing to Syria and the Ukraine is sickening but they did it to Libya, Egypt, Iraq, Serbia, and the list goes on and on.
Some see a petro dollar war or sincere interest in maintaining world currency status. I think far from truth. It's not happening. We were sold out long ago and now are being called out on the whole status bullshit. But DC knows and is complicit. It's over and so is the Fed.
Perhaps plans have changed - since Americans are sick of war, and false flags keep failing like never before, they need a new strategery...collapse the financial system, and use THAT as an excuse for war.
Pure speculation, but objectives do not change. Only plans to achieve them do. And the prime objective of all parasites, regardless of faction, is to reduce the population of "useless eaters" from whom they usurp wealth and power without putting a goddamned thing worth any value into society.
The dollar is inherently weak and 'they' don't need to collapse anything. It will die on it's own.
I agree some stage play may be happening to make those at the helm look less culpable but in truth this thing has been on it's last legs since 1971. That it has survived this long is remarkable. It's continuation sinc 2008 has been semi-miraculous.
The system is so fragile I really don't think anyone wants to be seen as giving the patient, already in a wheelchair, that last push down the stairs. Just leave him sit and die peacefully.
Put a fork in it. It's done...