Iran signed an agreement with Russia under which it has broken free from the petrodollar, and will "sell", or rather barter crude oil to Russia in exchange for products. The announcement was made by Iran’s Oil Minister Bijan Zanganeh, as reported by Russia’s RIA and TASS news agencies.
"The deal has been concluded. We are just waiting for the implementation from the Russian side. We have no difficulties; we signed the contract, everything is coordinated between the parties. We are waiting for Russian oil companies to send tankers,” he said, as quoted by Russian news agencies. While sanctions against Iran have been lifted, restrictions on trade in US dollars for the country's banks remain, making it difficult to sell oil on the open market.
As reported here just over three years ago, the $20 billion agreement was initially signed in April 2014 when Iran was under Western sanctions over its nuclear program. Russian traders were to participate in the selling of Iranian oil. In exchange, Iran wanted essential goods and technology from Russia.
This is what Reuters reported in April 2014 when the deal was first announced:
Iran and Russia have made progress towards an oil-for-goods deal sources said would be worth up to $20 billion, which would enable Tehran to boost vital energy exports in defiance of Western sanctions, people familiar with the negotiations told Reuters.
In January Reuters reported Moscow and Tehran were discussing a barter deal that would see Moscow buy up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goods.
The White House has said such a deal would raise "serious concerns" and would be inconsistent with the nuclear talks between world powers and Iran.
Little did the US know back in 2014 that less than three years later, Russia would also be running the US, courtesy of wholesale manipulation of tens of millions of Americans, whom it hacked and convinced to vote for Trump.
Sarcasm aside, when the sanctions against Tehran were lifted in 2016, Russian Energy Minister Alexander Novak said the deal was no longer necessary. However, Novak said in March 2017 that the plan was back on the table with Russia buying 100,000 barrels per day from Iran and selling the country $45 billion worth of goods, Russia Today reported.
Russia and Iran discussed energy, electricity, nuclear energy, gas and oil, as well as cooperation in the field of railways, industry, and agriculture.
Novak had announced in February that Russia’s state trading enterprise Promsirieimport has been authorized by the government to carry out the purchase of Iran’s oil through the oil-for-goods program under study by both countries. Meanwhile, Zanganeh had been quoted by the media as saying that Iran would be paid in cash for half of the oil that would be sold to Russia. The due payments for the remaining half would be made in goods and services, the Iranian minister had said.
A February report by the International Monetary Fund said that while Iran has been reconnected to SWIFT, significant challenges prevent Iranian banks fully-reconnecting to global banks still exist mostly due to remaining US sanctions.
“US primary sanctions apply to US financial institutions and companies, including their non-US branches (but not their subsidiaries). Moreover, with very limited exceptions, businesses and individuals related to the US continue to be generally prohibited from dealing with Iran, including with the government,” the IMF said.
“US dollar clearing restrictions have not been lifted and pose a significant challenge for non-US banks who may do business with Iran, but may not be paid in US dollars,” it added.
And since necessity is the mother of invention, what better way to bypass the world's reserve currency than to go back to the way commerce was conducted before currencies were even created: through barter.