Russia and Iran Reach $20 Billion Oil for Goods Arrangement

On April 13, 2015, Russia announced it would commence trading a range of products, including grains and construction materials, for crude oil with Iran under a barter arrangement.  The agreement, reportedly worth $20 billion and valid for the next five years, envisions Russia purchasing as much as 500,000 barrels of oil per day from Iran.  Reports differed on whether the arrangement was formally in place, actively being implemented or merely agreed to in principle.

The two countries have been discussing this barter agreement for over a year and Russia is, in part, likely seeking to establish a beachhead in the Iranian market prior to any sanctions being lifted as a result of the ongoing nuclear negotiations.  Iran is already the third largest importer of Russian wheat grains and it is assumed Rosneft and the National Iranian Oil Company (NIOC) are involved in the deal, due to their position as the primary state-owned oil companies.