As Thick As Thieves? Russia Stops Fuel Supply To Iran
Russia has ceased its gasoline exports to Iran for the past few months, an informed Iranian oil ministry official told Iran International on Monday.
Russia has ceased its gasoline exports to Iran for the past few months, an informed Iranian oil ministry official told Iran International on Monday.
The source said the Ministry had intended to import up to 10 million liters of gasoline daily from Russia to compensate for the gap in gasoline production and consumption. However, the Russian authorities, aware of Iran's needs, have halted the sale of gasoline to Iran, disrupting the planned efforts to address the fuel deficit. The expected volume from Russia would constitute roughly 10 percent of Iran's daily consumption in 2022.
The shortage has led to reductions in gasoline shipments to gas stations and long lines forming with cars rushing to fill their tanks.
According to the source, several other Commonwealth of Independent States (CIS) countries have also been pushed by Moscow not to sell gasoline to Iran, further compounding the challenges faced by Iran. The CIS is a regional intergovernmental organization in Eurasia, formed following the dissolution of the Soviet Union in 1991.
One possible explanations could be Moscow's desire to raise the price of its gasoline, amid serious financial and economic challenges it faces following its invasion of Ukraine. Russia's currency the ruble fell again on Monday against the US dollar, breaking the psychological barrier of 100 rubles per dollar.
After Western countries slashed energy imports from Russia, Moscow started exporting gasoline and diesel to Iran by rail this year for the first time since it lost its traditional customers. In February and March, Russia supplied up to 30,000 tons of gasoline and diesel to Iran, Reuters reported.
Subsequently, Ahmad Maroufkhani, the head of Iranian Oil, Gas and Petrochemical Products Exporters' Union, disclosed that Iran was procuring each ton of petroleum products from Russia at a price $150 higher than global market rates. He told Tajaarat News that in addition to Russia Turkmenistan and Uzbekistan had also supplied fuel this year. According to Reuters, the shipments were made by rail from Russia via Kazakhstan and Turkmenistan.
Iran has been struggling with gasoline shortages since at least the beginning of the summer of 2022 and was forced to release one-third of its strategic gasoline reserves by the end of the same year. A source at the oil ministry told Iran International Sunday that the National Iranian Oil Refining and Distribution Company (NIORDC), a department within the ministry, has released around 900 million liters of strategic gasoline reserves into the market in an effort to make up the deficit. Iran has also scaled back its distribution, announced as a needed step to curb smuggling, limiting each refueling session to only 30 to 40 liters.
Earlier in the month, NIORDC deputy manager Ali Ziyar said that the average daily consumption of gasoline has hit 124 million liters, indicating a 20-percent increase compared with the previous year. “In recent years, the maximum annual growth in gasoline consumption has been seven percent, but this year we have suddenly experienced a 20 percent increase in consumption,” he said, tacitly acknowledging that a large amount of fuel is being smuggled out of the country because it is much cheaper than Iran’s neighboring countries. He also stated that the daily gap between production and consumption is 17 million liters.
In recent days, rumors of an impending gasoline price increase have once again ignited, prompting a rush to gas stations. One of the main reasons that the Islamic Republic has not increased prices is because a fuel price hike would risk another wave of protests and strikes across Iran, especially with the first anniversary of Mahsa Amini’s death in police custody -- the starting point of the ‘Women, Life, Liberty’ movement on the horizon.
Reza Ghorashi, a professor of Economics at Stockton University in the US, told Iran International that a large strike by the fuel truck drivers amid tensions over prices can cripple the regime’s economy. He said in addition to economic repercussions, such an action is also a bold political statement in support of the popular street protests. Truckers, who do the heavy lifting of transporting goods mainly to and from Iran’s border areas and ports across the country, have already held several rounds of weeks-long strikes that brought the flow of goods and the supply chain to a grinding halt.
An military ally of Russia providing drones and missiles, the Iranian regime is also involved in a bitter confrontation with the West. Iran and Russia’s alliance may prove to be very flimsy as both countries are grappling with Western sanctions that and further economic woes for their people.
Amir-Abdollahian who was speaking at a gathering in the foreign ministry said the funds were already sent from South Korea to a European bank on August 10, the day when a hostage release deal the United States was announced.
The US agreed to allow $6 billion held in two South Korean banks to be released in exchange for five Americans taken hostage in Iran in the past few years. The funds were frozen due to US banking sanctions on Iran imposed after Washington pulled out of the JCPOA nuclear deal in 2018.
The Iranian foreign minister also stated that in the original agreement with the United States and different parties it was agreed to release the funds in a few batches, “not to inflict a shock on Korea’s financial system,” but later it was agreed “to transfer most of the funds to Europe except a small portion in order not to close the bank accounts in Seoul.” He did not name the European bank.
Media reports both in Iran and abroad have said that the funds will be transferred from South Korea to Switzerland, converted into euros and then transferred to Iranian bank accounts in Qatar. The money will stay there and be allowed to be disbursed for humanitarian needs, such as food and medicine, with the United States involved in the process. However, it is not clear exactly how Washington will make sure that Iranians do not cheat, given their years of experience in manipulating financial systems and circumventing sanctions.
One worrying factor is that the released funds will be deposited in Qatar in euros, which will hamper the US ability to closely monitor wire transfers unlike dollar transactions.
Despite earlier Iranian statements that as soon as the funds reach Qatar the five US citizens will be allowed to leave, Amir-Abdollahian said that “the two issues are not related.” The Biden administration has come under sharp criticism for what many say is a ransom paid for hostages that will enrich Iran’s regime and embolden would be hostage takers.
Almost immediately, Amir-Abdollahian seemed to correct his statement, saying that through an intermediary, Iran and the United States have two separate documents, one about the release of the funds and another for freeing the hostages.
Informed sources earlier told Western media that the process of fund transfers could take 30-45 days, but according to Iran’s foreign minister the money is already in Europe.
Foreign Ministry Spokesman Nasser Kanani told reporters on Monday that disclosing specifics of the deal to the media would not be "helpful" given the current circumstances. “The details of this understanding in the media are not helpful at this point in time," Kanaani added.
The withholding of information comes in the face of increasing criticism and protests against the agreement, both in Iran and internationally, particularly in the United States.
The Wall Street Journal in an editorial on Sunday harshly criticized the Biden administration for paying $1.2 billion per hostage and dismissed the claim that the funds will only be used for humanitarian needs.
“Iran will use the cash the same way it did the money it received from the Barack Obama-John Kerry 2015 nuclear deal—to spread mayhem in the Middle East and beyond,” WSJ said. It also argued that “Money is fungible, as the White House knows, and its ‘humanitarian purposes’ line is best understood as political cover to justify the money-for-hostages deal. In a competition for the funds between the Islamic Revolutionary Guard Corps and the public health of the Iranian people, who do you think wins?”
Iran’s judiciary said on Monday that eight suspects have been detained over the attack on Shahcheragh, a funerary monument and mosque in Shiraz that was the site of a similar attack less than a year ago.
Saying that all detained suspects were foreign nationals, the judiciary's Mizan news agency said the main perpetrator was identified as Rahmatullah Nowruzov, a citizen of Tajikistan, while the nationalities of the other suspects remained unknown. Tasnim, a media outlet affiliated with the Revolutionary Guard said 10 foreigners were arrested in relation to the attack.
According to NourNews, a media outlet close to Iran's Supreme Council of National Security, one person was killed and ten people were wounded when the shooter opened fire at the premises of the shrine before being arrested.
The regime’s state broadcaster announced that the Islamic State group (ISIS) has claimed responsibility for the attack, but so far there is no evidence of any statement by the terror group.
In last year's attack when 15 people were killed at Shahcheragh, the Islamic State claimed responsibility. The militant group, which has claimed other attacks in Iran -- including the deadly twin bombings in 2017 that targeted Iran's parliament and the tomb of the Islamic Republic's founder Ruhollah Khomeini – has played the role of boogeyman in regime’s narratives of regional developments to justify its military presence and support of other foreign militias, and strict security atmosphere inside the country.
A large number of regime officials, including parliament speaker Mohammad-Bagher Ghalibaf, Foreign Minister Hossein Amir-Abdollahian and President Ebrahim Raisi as well as several lawmakers and military commanders, vowed revenge against those behind the attack.
In a vague remark, Foreign Ministry spokesman Nasser Kanaani said, “The attack on worshippers is a heinous act of vengeance in response to the significant blows that Iran dealt on terrorists in the battlefields.” The governor of Fars province, Mohammad Hadi Imaniyeh, attributed the motive of the assailant to "vengeance" for the execution of two individuals involved in last year's attack.
In July, Iran publicly hanged two Afghan men who were accused of "providing weapons, procurements, logistics, and guidance of the main perpetrator", which bears uncanny resemblance to the Sunday shooting. The lone gunman, armed with an assault rifle, entered the shrine last October and opened fire, and was subsequently shot and later died in hospital. He was also identified as a Tajikistan citizen. The October attack coincided with anti-regime protests in Iran. This prompted speculation and accusations that the government orchestrated the incident as a diversion from the protests and as a pretext for further crackdown.
Within the Iranian social media sphere, opinions diverge on how to respond to the attack, with some holding the regime accountable for either incompetence or possible involvement, while others echo the regime's stance in condemning the extremists.
A large number of people criticize the regime for focusing its forces and surveillance methods for cracking down on women who refuse to wear the hijab, rather than real criminals. Additionally, some speculate that this attack was orchestrated to divert public attention away from the ongoing political debate regarding the enforcement of new hijab laws, currently undergoing final deliberations in parliament.
In the lead-up to the anniversary of last year's nationwide anti-regime protests in September, Iranian authorities have heightened security measures, resorting to intimidation and threats in an attempt to prevent public demonstrations. Some believe that the attack on Shahcheragh was orchestrated to provide a pretext for tighter security measures.