After the lifting of international sanctions, Iranian oil is returning to the market. Vitol Trader has already begun purchasing it from Tehran to supply the Asian and European markets. The Federal News Agency reports Iran will export around 300 thousand barrels daily to Europe (France, Romania, and Italy). It is an insignificant volume, considering the fact that last year Iran produced three million barrels daily. But in the second half of the year, the volume may reach 500-600 barrels daily. And half of the volume will be provided to the European market. Analysts predict there will be tough competition between Russia and Iran this year, which will lead to $150 million of losses annually.
Meanwhile, Nina Mamedova, head of the Iranian section of the Center for the Study of Countries at the Middle East of the Institute of Oriental Studies of the RAS, thinks that the lifting of the sanctions against Iran and the emergence of the sanctions regime against Russia could greatly change the structure of the two countries' bilateral trade turnover.
“Firstly, the limitation of Russia's economic cooperation with Europe raises for us the role of Iran for a possible range of goods and technologies. For example, the Russian market is experiencing a shortage of medicines and the sixth five-year plan for pharmaceuticals should become an export industry in Iran.
Secondly, Iran’s role as a supplier of food products to our country is growing, especially in connection with the change in relations with Turkey. In January, permission was given to 25 Iranian companies for supplying food to the Russian market. Iran is ready to supply Russia with dairy products, and fish products, and so on. But Iranian exporters, of course, should be informed that this situation, which has arisen in Russia now, may change at any time. And in taking a place in the Russian market, the Iranian companies should try to develop it through the development of appropriate technologies for processing, packaging of goods, on the organization of their sales,” Mamedova believes.
According to her, Iran will remain an important market for industrial goods and technologies for Russia: “Some Russian companies that took part in the recent Russian industrial exhibition in Tehran were able to conclude at least tentative agreements. I must say that just the fact that 350 representatives from more than 80 companies came indicates the interest of Russian business in the Iranian market. Within the framework of this exhibition it was agreed to start the production of a line of combine harvesters with the participation of the Russian and Iranian private sectors. An agreement on the transfer of the production of long rail technologies to Iran was signed.”
Mamedova states that Lukoil is returning to Iran, though on a limited scale. “This is only the beginning. It seems that Russian entrepreneurs are not sufficiently used to the opportunity for free and special economic zones. These zones are created by Iran along its sea and land borders. It is very optimal for Russian companies. Iranian businessmen have also underutilized the capacity of our Russian industrial parks. A possible incentive for the development of our economic relations, especially in the medium and long terms, can be the implementation of policies supporting small and medium-sized businesses in recent years in both countries, in Iran, in our country. The very experience of the country of being under sanctions and the Iranian experience, and our experience shows that it's still primarily the large companies are the most vulnerable in this mode. And small and medium-sized businesses stay afloat.”
Mamedova thinks there are opportunities for broader cooperation within regional organizations and regional projects: “The North-South which has been inactive due to the sanctions will be intensified again. Russia seriously considers an opportunity to involve Iran into the Eurasian Union, as this is beneficial for both countries. Involvement of Iran could encourage intensification of its activity.”
