In recent weeks, Tehran has been trying to prevent the damaging impact of the reimposition of US secondary sanctions targeting the Iranian petroleum industry. Protecting the strategic value of its petroleum sector — both in terms of hard-currency earnings as well as technological impetus for industry — will, however, depend on Tehran’s ability to attract foreign investment and technology as well as continuing to export crude and petroleum products. Considering that the major Western oil and gas companies will withdraw from Iran, the answer to Iran’s needs lies with Russia. 

Following a recent visit to Moscow by Ali Akbar Velayati, senior foreign policy adviser to the supreme leader, Ayatollah Ali Khamenei, news emerged that Russia had agreed to invest $50 billion in Iran’s petroleum sector. It is unclear whether the figure includes actual investments or whether it refers to the volume of barter trade involving Iranian crude oil, but the key issues are what Russia can actually do for Iran’s petroleum sector with regard to investments as well as its potential role as an intermediary for Iranian crude exports.

Without details of the reported agreement, especially what Russia will commit to, it is difficult to assess the feasibility of the understanding, which Iranian analysts are approaching as a puzzle. The questions are what might be feasible and whether that will be desirable from the Iranian perspective.

The most obvious framework that the $50 billion figure might involve is the existing oil-for-goods scheme originally signed in 2014, before the lifting of nuclear-related sanctions under the Joint Comprehensive Plan of Action (JCPOA). After the implementation of the nuclear deal in January 2016, Russian Energy Minister Alexander Novak said the scheme was no longer necessary. In March 2017, however, in light of the hesitation of international banks to process transactions with Iran, a new version of the deal was reached.