Iran receives first Russian fuel cargo by rail: Reports
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The two nations expand their trade and energy sectors together and overcome Western sanctions.
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Railroad freight cars and oil tanks, in Omsk, Russia May 1, 2020. (Reuters)
Citing three industry sources and export statistics, Reuters reported that Russia has delivered its first rail fuel exports to Iran as the two sanctioned countries swiftly increase energy and commercial links despite Western sanctions.
Last October, Russian Deputy Prime Minister Aleksandr Novak said that Moscow and Iran had reached an agreement to swap oil and natural gas supplies worth $40 billion. Since then, the two countries have been negotiating the deal's routes and technical details.
According to sources and monitoring data, Russia supplied around 30,000 tonnes of gasoline and diesel to Iran in February and March of this year.
Read more: Russia, Iran examine use of digital currencies for trade: Ambassador
Reuters mentioned that all petroleum supplies were delivered by train from Russia through Kazakhstan and Turkmenistan. Some fuel was also transported by truck from Iran to neighboring countries, notably Iraq.
Formerly, Russia sent limited amounts of gasoline to the Middle Eastern countries across the Caspian Sea. But, Russia is now considering broadening rail exports to Iran as seaborne diesel and gasoline cargoes face hefty freight fees and price limitations imposed by the West.
Iran is an oil-producing country with vast reserves and its own refineries. But, demand has recently overtaken local fuel output, particularly in the country's northern regions, according to a dealer in the Central Asian oil products market.
A source familiar with supplies to Iran told Reuters that although some logistical challenges due to rail congestion may be seen, supplies to Iran are expected to rise this year.
Since poor train connections may be a barrier to future development, the two nations are discussing infrastructure improvements to assist in enhanced economic cooperation.
Azerbaijan is now the principal overland route for commodities going from Russia to Iran. This is part of the 7,200-kilometer-long International North-South Transport Corridor, which connects ship, rail, and road channels for carrying freight between India, Iran, Azerbaijan, Central Asia, Russia, and the rest of Europe.
Though the corridor existed throughout the Soviet era, expanding it has taken on new significance as Western sanctions have pushed Russia to shift its trading channels to Asia and the Middle East.
In early February, Iranian President Ebrahim Raisi pointed out that the increase in Iran's oil sales and production are things that anger its enemies.
