Russia has begun exporting fuel to Iran via the rail route this year for the very first time as traditional buyers moved away from Moscow.
Russia as well as Iran, who both happen to be under sanctions by the west, are moving closer to each other so as to support their respective economies and to also undermine western sanctions, which are being termed unjustified by Tehran and Moscow. Western sanctions on Russian oil products have gone on to reshape the global fuel markets as the tankers are now bound to take longer routes.
Apparently, in February and March of this year, Russia supplied 30,000 tonnes of gasoline as well as diesel to Iran, as confirmed to Reuters by two sources privy to the situation.
It is well to note that all the volumes happened to be supplied through rail from Russia via Turkmenistan and Kazakhstan. The gasoline cargoes were thereafter sent by Iran to neighbouring nations, including Iraq, confirmed a source.
Iran is a big oil producer with its own set of refineries; however, recently, its consumption has gone beyond domestic fuel production, specifically in its northern provinces.
Russia had already supplied small volumes of fuel to Iran through tankers via the Caspian Sea, as happened in 2018.
Russian oil companies are presently inclined towards exporting diesel and gasoline to Iran through rail since exports by sea are bound to be charged heavy freight rates, and, of course, there is a price cap that is imposed by the G7 countries. That said, the rail exports also face bottlenecks along the route.
As per one of the sources, the fuel supplies to Iran are expected to increase this year; however, there are numerous issues pertaining to logistics because of rail congestion, which may keep exports from booming.