Russia Puzzles with Deal/No Deal with Iran on Oil

MOSCOW，Months of oil talks between Russia and Iran, both heavily sanctioned by the West, took an unexpected twist on Tuesday when Moscow first announced it had agreed with Tehran to help it sell its crude - only to withdraw the statement shortly afterwards.

In January, sources told Reuters Iran and Russia were negotiating an oil-for-goods swap worth $1.5 billion a month that would enable Iran to lift oil exports substantially, undermining Western sanctions.

Under the proposed deal Russia would buy up to 500,000 barrels a day or a third of Iranian oil exports in exchange for Russian equipment and goods, sources have said.

Russian and Iranian officials later acknowledged such talks were taking place but said the deal was uneasy as both Russia and Iran are large oil exporters and lack infrastructure to easily swap crude to help each other make sales.

On Tuesday, Russian Energy Minister Alexander Novak and his Iranian counterpart Bijan Zanganeh signed a five-year memorandum of understanding in Moscow, which included cooperation in the oil sector.

"Based on Iran's proposal, we will participate in arranging shipments of crude oil, including to the Russian market," Novak was quoted as saying.

It gave no reason for the withdrawal and could not say what the new statement would say about oil cooperation.

Sanctions have reduced Iranian oil exports to around 1.0-1.5 million bpd from as much as 2.5 million bpd before the sanctions were imposed two years ago, drastically reducing the country's export revenues.

(downstreamtoday  Edited by Topco)