Russia Starts Sending Gasoline, Diesel To Iran
Russia has started exporting gasoline and diesel to Iran by rail this year for the first time since it lost its traditional customers over its invasion of Ukraine.
Russia has started exporting gasoline and diesel to Iran by rail this year for the first time since it lost its traditional customers over its invasion of Ukraine.
Citing industry sources and exports data, Reuters said in report on Tuesday that in February and March Moscow supplied up to 30,000 tons of gasoline and diesel to its ally Tehran. Both countries are under Western sanctions that are pushing them closer in order to support their economies and undermine the punitive measures.
Last autumn Russia's Deputy Prime Minister Alexander Novak announced the start of swaping oil products with Iran, but actual shipments only started this year, Reuters sources said. All the volumes were supplied by rail from Russia via Kazakhstan and Turkmenistan.
The report did not say why Iran is importing fuel from Russia, but the more plausible scenarios seem to be one of the following.
The Islamic Republic may need the fuel to be able to maintain its electricity generation and production of petrochemicals. Iran needs natural gas or diesel to run its power stations and refineries and is facing a serious shortage of both.
Another possibility is that Iran’s government or the IRGC are exporting the fuel to other countries. If this is the case, Moscow must have been selling the fuel very cheap leaving a margin of profit for Iran.
One of the Reuters sources said that some gasoline cargoes were sent on from Iran to neighboring states, including Iraq, by truck. This strengthens the speculation about Iran trafficking the gasoline for profit.
The Islamic Republic has been reporting a substantial rise in domestic consumption of gasoline and diesel in recent months. The consumption of fuel in Iran, an oil producer with its own refineries, had exceeded domestic fuel production, especially in its northern provinces, Reuters quoted a trader in Central Asian oil products market as saying.
However, the question is how could consumption increase in a country gripped by high inflation, economic stagnation and rising poverty.
The unprecedented daily gasoline consumption of 144 million liters, repeatedly announced in late March and April, is 50 percent higher than Iran’s average daily consumption in recent years.
This could be an attempt to explain away imports of Russian fuel, while hiding the fact that the cargoes are actually being exported.
Head of National Iranian Oil Refining and Distribution Company (NIORDC) Jalil Salari said on February 22 that “the gasoline consumption is around 103 to 104 million liters per day, but the figure usually increases during Nowruz (New Year) holidays. However, considering that Nowruz coincides with the fasting month of Ramadan – when Muslims travel less frequently -- there may not be much change in gasoline consumption.”
But in March and April the government narrative changed, claiming a sudden jump to 144 million liters of daily consumption.
Russia had supplied small volumes of fuel to Iran by tanker via the Caspian Sea, as was the case in 2018, two traders familiar with the matter said. According to the report, Russian oil companies are currently interested in exporting diesel and gasoline to Iran by rail as exports by sea face high freight rates and a price cap imposed by the G7 countries.
However, the rail shipments face bottlenecks along the route too, with one of the sources saying that "We expect fuel supplies to Iran to rise this year, but we already see several issues with logistics due to rail congestion. That may keep exports from booming."
The short report Tuesday did not provide any evidence or sources, but said Rouhani convenes his election meetings with aides on weekly basis.
Rouhani or people close to him have not said anything about the elections or his political plans and there are no reports of him having formed an election team.
Iran’s hardliners and the Revolutionary Guard who control the current parliament are opposed to Rouhani or any other politician who in Iran’s political context can be described as centrist or reformist.
Tasnim makes that clear, repeating harsh criticism routinely voiced by hardliners that the country’s current economic crisis is the fault of the Rouhani administration, which they say counted on good relations with West and lifting of sanctions instead of presumably focusing on indigenous efforts to boost production.
However, since Rouhani left office in mid-2021, the hardliners who took over both the presidency and the parliament have made matters much worse.
Iran’s currency has halved in value since August 2021 and inflation has soured above an annual 40-percent rate.
The current members of parliament have very little to show after three years into their term and given months of anti-regime protests they are very nervous about their re-election according to commentators who write in Tehran media.
Last week, news emerged that some lawmakers are entertaining the idea of barring anyone who in the past has served three terms in the legislator from running next year. Already, several politicians and pundits have sharply criticized the possible move, saying that this is only aimed at eliminating competition to the sitting parliament packed with hardliners.
But given the fact that in the 2020 elections most centrists and reformists were barred from running by the Guardian Council controlled by Supreme Leader Ali Khamenei, Rouhani would not risk putting his candidacy forward unless he receives assurances from him that he would not be rejected. He has already said that next elections must be free and fair.
Also, as a former president, Rouhani would run only if he can receive backing by the majority in the new parliament to be crowned Speaker. For that, “He would need to have a sizeable contingent of supporters, which means that Khamenei has to allow non-hardliners also to run and get elected,” political analyst Behrouz Turani told Iran International. He also said, “The report by Tasnim could be a ploy to test Rouhani and see if he will deny any intention to run next year.”
It should also be noted that the Iranian campaigns typically do not start months before an election.
For now, no one knows what the Supreme Leader is thinking. His strategy of handing over both the parliament and the presidency to loyal, ultra-conservative politicians and operatives has backfired.
Not only the economy has sunk deeper into crisis, but the Islamic Republic faces the largest popular opposition in its 44-year history. Even many loyalists express total disappointment with President Ebrahim Raisi and the parliament in the local media.
In the past, Khamenei has played the political game of allowing reformists to win elections to mollify a dissatisfied population, and he might decide to play the same game again, but Rouhani during his presidency has made it clear that he was not happy with Khamenei’s and IRGC’s interference in the affairs of the government.
Moreover, some voices have raised the issue of a constitutional change, meaning to eliminate or restrict outfits that are Khamenei’s tools for interference.
After massive protests and lingering instability, this time the political atmosphere will be different from past elections. Either Khamenei has to double down in supporting the hardliners or has to allow other regime insiders frustrated with him and angry with the IRGC to take over the parliament.
Mohammad-Reza Farzin, the governor of the Central Bank of Iran (CBI), said on state TV Monday night that "all the countries of the world have regulations to prevent capital flight, and capital flight means that you give rials and receive a foreign currency, and it doesn't matter if you keep this currency at home or, for example, go to Turkey and buy a house with it.”
Farzin avoided issues of transparency, he claimed people can do whatever they want with their money if it is not illegal or considered laundering. To have control over the people’s money, the Islamic Republic has recently announced regulations that push people to open foreign currency accounts in its notoriously corrupt, if not bankrupt banks in Iran instead of getting the foreign currency in cash.
Farzin said pushing people to have long-term foreign currency accounts is a measure to control the currency market, but the owners of these accounts cannot withdraw deposits in the foreign currency and only can get the equivalent in almost worthless rials. On the other hand, Farzin has said that the CBI does not consider the exchange rate to be at the actual rate at which people are buying and selling currencies in the market, and that the government plans to have a cap on the rates. For example, the rate that Farzin had announced for the exchange of dollars is about half of the exchange rate at the market at about 280,000 rials for one dollar, while the current rate is about 510,000 rials.
The cash-strapped regime has been unable to access a large portion of its export revenues due to international sanctions, and has been eying measures to grab money kept by the public in safety deposit boxes or at homes. In April 2022, the country’s Headquarters for Combating Smuggling of Goods and Currency announced that the maximum limit for keeping foreign currencies is $10,000 or its equivalent in other currencies. For any amount more than this limit, people should apply for special permits.
Elsewhere in his remarks, Farzin referred to a suspicious bank heist last year, the biggest in recent history and the shadiest in nature as robbers broke only into safety deposit boxes and were arrested in a matter of days. Farzin said that according to the information obtained from the robbery as well as the data from other safety deposit boxes throughout the country, about $15-16 billion dollars are kept in boxes.
In June 2022, thieves broke into at least 200 to 250 safety deposit boxes in the central Tehran branch of Iran’s largest bank – the state-owned Bank Melli (National Bank). Apparently, the robbers gained access from an adjacent building during a two-day holiday. Four days after the heist, police displayed recovered money and gold and announced the arrest of nearly 30 people allegedly involved in the large bank heist in Tehran. The surprisingly quick reaction and arrests by the police raised eyebrows with many seeing it as an ‘inside job’. In February, Iran’s judiciary said 20 people involved in the robbery have been released on bail.
A few hours before Iran’s chief banker went on state television, a large group of the victims of the burglary held a gathering in front of the bank and protested "10 months of patience is enough, return our property".