Russia has offered discounts to oil buyers, but given the Western sanctions imposed on the country, it will take time for the Russians to find customers.
After the start of the Ukraine-Russia war, Moscow focused on India and China, which are Iran’s main oil markets. Iran could have revived its lost oil markets amid rising world oil prices. Iran’s lack of coordination with the Russians could have allowed Iran to reduce its losses, but I have heard that the Russians are not even willing to coordinate with Iran on discounts and prices.
The export activities of Iranian oil and steel industry
Russia offered its steel at a discount, attracting old buyers in Tehran. Countries such as Afghanistan, China, South Korea and Thailand, which are major Asian customers of Iranian steel, are now turning to Russia, jeopardizing Iran’s $ 6 billion profit generated by steel exporters.
This means that there are not many companies and countries that want to cooperate with countries that are subject to sanctions. Therefore, the number of people with whom Iran can reach an agreement is limited.
Today, Iran’s steel exports have fallen sharply due to heavy discounts offered by the Russians.
On the other hand, the Iranian government, which in April imposed 18% tariffs on crude steel exports, has done little to deal with widespread power outages across the country.
As a result of these factors, in the fiscal year 2021-22, Iran’s steel industry fell by 6 million tons from its target production, causing a loss of $ 4 billion.
The Tehran government and Russia had prevented Iran’s steel industry from establishing itself on the world market. This series of decisions by the Iranian government has led Iranian manufacturers to increase their prices for foreign customers. This coincided with Russia offering big discounts to buyers, with the result that Tehran lost many of its customers in the world.
This situation will have a negative impact on Iran’s economic growth and will also likely devalue Iran’s currency against the dollar, as the steel industry played a significant role in Iran’s foreign exchange earnings while the country was under US sanctions.
The opportunity for the West
The US and the EU should seize the opportunity posed by the reduction of Iranian oil and steel production by approaching the Iranian government and setting the table on an agreement in which both the EU and the West in general will absorb the Iran’s total steel and oil production.
In return, Iran will have to re-agree on its nuclear control procedures and freeze any actions in the Middle East and against Israel. In any case, the West is the only one that can replace Iran’s customers, such as China and the countries of Southeast Asia.
Certainly, after such an agreement, there will be a domino of geopolitical developments, given that if Iran is slowly and steadily tied to the markets of the West, political reforms will be implemented inside the country. At the same time, a new gas pipeline will be able to run from Iran-Iraq-Jordan-Israel and Syria, respectively, with an exit to the Mediterranean Sea. The purpose of this pipeline, which will branch out and pass through the territory of Syria and Israel, respectively, is the uninterrupted energy supply of the EU.
The brave one wins and writes the history. This must not be forgotten by the political leaderships of the Western countries.
