Iran’s President Ebrahim Raisi told his cabinet ministers not to overlook the implementation of 35 agreements he signed during his tour of three Latin American countries this week.
The government’s official news website IRNA in a long report Saturday highlighted Raisi’s trip to Venezuela, Nicaragua and Cuba, with the headline of “35 cooperation agreements signed under America’s nose.”
Iranian officials and government media have been emphasizing the significance of the three-nation tour as a challenge to the US “in America’s backyard.”
However, Iran is in relative international isolation as no Western countries and allies invite Iranian leaders or visit the country themselves. The three Latin American countries Raisi visited are also struggling economically under US sanctions and leftist ideological rule.
Raisi emphasized during his trip solidarity against the United States and cooperation to overcome sanctions.
During his meeting with Cuban president Miguel Diaz-Canel Raisi said, "The conditions and circumstances in which Cuba and Iran find themselves today have many things in common. Every day our relations grow stronger."
The Cuban president also praised close ties with Iran. "Venezuela, Nicaragua, Cuba and Iran are among the countries that have had to heroically confront sanctions...threats, blockades and interference by Yankee imperialism and its allies with a tenacious resistance, This visit reinforced our conviction that we have in Iran a friendly nation in the Middle East, with which to confide...and talk about the most complex global issues."
However, there is little in economic cooperation and trade the three countries can achieve with Iran, which faces a serious economic crisis, with by 70-percent inflation and a battered currency.
Israeli Channel 12 news reported that US Secretary of Defense Lloyd Austin and Israeli Defense Minister Yoav Gallant met Thursday on the sidelines of NATO meeting in Brussels and reached understandings in the light of an emerging nuclear deal between Tehran and Washington.
In recent weeks, multiple news outlets have reported on direct and indirect US Iranian talks on reducing tensions, a possible interim unwritten agreement to slow down Tehran’s nuclear program and release of Americans held in Iran.
The Biden administration has repeatedly denied any deals with Iran, acknowledging that contacts were made to make clear what US demands were. The latest denial came from Secretary of State Antony Blinken on Friday during a press conference.
“With regard to Iran, some of the reports that we’ve seen about an agreement on nuclear matters or, for that matter, on detainees are simply not accurate and not true,” Blinken said.
Channel 12 news also quoted senior security officials as saying that cooperation with the United States has increased on the issue of Iran, involving the Israeli Defense forces in joint efforts.
Washington has assured Jerusalem that it will maintain its military edge over Iran, and Austin also made clear to Gallant that in addition to close cooperation over Iran, Israel will maintain a free hand to act against adversaries.
Israel has made clear that if it concludes Iran is close to obtaining nuclear weapons, it will not limit itself by any agreements the United States and others might have reached with Tehran and will take military action to stop what it sees as an existential threat.
Israeli officials and media indicate that some sort of a deal between Washington and Tehran is moving forward and that Israel will accept the general parameters of a possible agreement and will not try to foil it.
Israel’s ambassador in the US Michael Herzog was quoted as saying, “Diplomacy isn’t necessarily a bad thing,” during an event hosted by the Democratic Majority For Israel, according to Haaretz.
“As far as we’re concerned, diplomacy in and of itself, and such understandings, are not necessarily bad to the extent that they can help deescalate a situation,” Herzog said.
Iran has acknowledged diplomatic efforts behind the scenes but has been cautious in heralding any imminent deals.
Nour News, affiliated with the national security council on Friday said the White House is showing "positive signals of changing its approach toward Iran in the past few months".
Regarding reports about a possible nuclear deal, the website did not express optimism, but its claim of positive signals was an indication of some satisfaction at the security council.
‘Reformist’ media in Tehran, critical of the ruling hardliners, continued to argue for flexibility and a deal that would lift crippling US sanctions imposed since 2018 when former President Donald Trump pulled of the 2015 JCPOA accord.
Aftab News close to former President Hassan Rouhani in an article on Saturday recounted the “trillions of dollars” in damages to Iran’s economy resulting from its nuclear dispute with the West over a period of two decades.
Regarding reports about a possible nuclear agreement between Iran and the United States, the website did not express optimism, but claimed Washington is giving positive signals.
"As the American media has speculated, one cannot be optimistic about a rapid agreement on issues related to Iran's nuclear matter," added the piece published on Friday.
“However, raising this issue by two American media outlets, which are known for their connection with the US political and security agencies, shows the White House is seeking to convey positive signals and return to the negotiating table, which Iran has never left.”
Nour News also claimed the new US approach is the result of the Islamic Republic's efforts to suppress the nationwide protests, as well as Tehran's decision to revive ties with Riyadh.
Meanwhile, Israeli opposition leader Yair Lapid slammed Netanyahu for allowing the agreement between Iran and the US to take place, claiming Netanyahu’s inability to influence the Biden Administration is due to the controversial judicial overhaul.
“Despite attempts to call it something else, what the US and Iran are about to sign is a nuclear agreement. It’s the same agreement that they tried to sign during [the Bennett-Lapid] government and we were able to prevent,” the former prime minister noted.
This comes as Israel's ambassador to Washington, Michael Herzog said in a speech on Thursday that “diplomacy [with Iran] isn’t necessarily a bad thing”.
In recent days, Axios and the New York Times reported on the talks between Iran and the United States.
The New York Times quoted the officials of the three countries as saying that “the Biden administration has been negotiating quietly with Iran to limit Tehran’s nuclear program and free imprisoned Americans.”
“The US goal is to reach an informal, unwritten agreement, which some Iranian officials are calling a political cease-fire. It would aim to prevent a further escalation in a long-hostile relationship that has grown even more fraught as Iran builds up a stockpile of highly enriched uranium close to bomb-grade purity, supplies Russia with drones for use in Ukraine and brutally cracks down on domestic political protests.”
Axios last week reported that US and Iranian officials held indirect talks in Oman last month with Omani officials shuttling between the two sides and passing messages.
The report also quoted five Israeli lawmakers saying that the mini-agreement includes Iranian commitment not to enrich uranium above the level of 60%, a US willingness to allow for the release of billions of dollars in Iranian funds that are currently frozen, and a prisoner exchange deal.
In an article on Friday, Bloomberg confirmed earlier claims by Islamic Republic officials about the rise in exports, saying that Iranian oil is quietly flooding into the global market again.
Citing data from market analytics provider Kpler, global strategic energy-consulting firm SVB Energy International, FACTS Global Energy Group (FGE) and the International Energy Agency, Bloomberg said that Iran’s exports have surged to the highest level in almost five years, “fortifying its re-emergence on the geopolitical stage while posing risks for a fragile global crude market.”
OPEC+ countries have repeatedly cut production to restrict supplies and control the plummeting prices.
“Iran’s crude exports smashed it last month,” said Homayoun Falakshahi, a senior analyst at Kpler. “Iranian crude is extremely interesting for those willing to take the risk to buy.”
As expected, Tehran’s ally China is its main customer, albeit with hefty discounts, which help smaller Chinese refiners offset a recent slump in profit margins.
While tanker-tracking shows that China has remained Tehran’s main buyer, official data registers no imports from the Islamic Republic in the past year. Instead, purchases have soared from Malaysia, where Iranian cargoes are often sent on a so-called “dark fleet” of tankers with transponders deactivated to avoid detection for transfer to another ship, blurring the origins of the consignment.
This practice has been going on since 2019, when the United States imposed full third-party sanctions on Iranian crude exports.
The regime is trying to save its battered economy through all means available, including mending relations with regional rivals Saudi Arabia, Bahrain, and Egypt; fostering ties with China; and most recently a tentative behind-the-scenes diplomatic effort to deescalate with Washington and the UN nuclear watchdog, the IAEA.
However, the extra sales have not been translated into tangible results in its rampant inflation rate at 70 percent, plunging national currency and popular dissatisfaction, manifested in periodic protests and strikes all over the country.
“China’s willingness to support Iran by taking its sanctioned oil, suggests a slight improvement in Iran-China relations,” Bloomberg quoted Greg Brew, an analyst at consultants Eurasia Group. He added that “All of this supports the view that Iran’s position is improving, along with its advancing normalization with other regional states,” especially given the fact the Beijing itself brokered the detente between Tehran and Riyadh, a rapprochement that was seen as a Saudi favor to China.
According to an article in Iranian daily Donya-e-Eqtesad, Iran’s oil exports – including crude, oil products, natural gas and condensates – was about $118 billion in 2011 when international nuclear sanctions were imposed, slashing the exports to half of that amount. Then came the 2014 oil price crash that pushed revenues down to $33 billion.
After the JCPOA was signed and international sanctions were lifted in 2015, Iran’s revenues began to rise and reached $66 billion in 2017 for a short while before the US pulled out of the JCPOA in May 2018 and again imposed sanctions that expanded a year later. By 2020, exports declined to about $20 billion and by some accounts to less than $10 billion.
The picture began to change toward the end of 2020 as Joe Biden won the presidential election and vowed to return to the JCPOA. At that point China began to increase oil imports from Iran.
Crude shipments have doubled since last autumn to reach 1.6 million barrels a day in May, even as American sanctions remain in place, Bloomberg claimed, citing Paris-based IEA as estimating that production has hit 2.9 million barrels a day, the highest since late 2018. “Consultants SVB Energy, Petro-Logistics SA and FGE believe that output is even higher, maybe surpassing 3 million barrels a day,” the report said.
Iran’s surge in shipments – and presumably the rise in revenues – has baffled economists and business analysts in Iran and abroad about where such a huge income is being spent, given that Iran’s currency has halved in value since mid-2022.
Mousa Ghaninejad, a professor of economics, recently said that “the oil money belongs to the people,” noting that “if the government takes it and spends it, so it should remove the taxes.”
He made the comment as the Raisi administration raised taxes by 59 percent in the budget bill of the current Iranian year (started in March), a staggering burden on its people amid high inflation and growing poverty. The total tax revenues planned in the draft budget will surpass $20 billion based on the current rate of exchange. In Iranian currency, however, this is a staggering 8.3 quadrillion rials – that is with 15 zeros.
Despite the huge tax bill for the people, the government budget still has a 50-percent deficit, due to a chaotic downturn in the economy mainly triggered by US sanctions on its oil exports and international banking.
According to a report by Tejarat News, the oil revenues are spent to balance the budget deficit as well as importing food items.
Aside from an overestimation of Iranian oil shipments, another explanation for the lack of a positive impact from increased exports is suspected deep discounts offered to China. Tejarat news for example said that China pays only two-thirds of the agreed price in cash and the rest is barter.
Iran also must undergo many other expenses for the illicit shipments and then lose more money trying to recoup revenues despite the US banking sanctions. Many different types of middlemen take huge profits for facilitating all these transactions. Otherwise, if Iran is charging even $60 a barrel, at the current rate of estimated exports, it would make $33 billion annually just from crude exports and more than $20 billion from oil products, balancing its budget.