Iran Aims To Expand Trade With Russia Amid Sanctions

According to Iran International sources, the Iranian Oil Ministry has taken the step citing the need to curb smuggling. The other option would be to raise prices but the regime is worried that it could trigger protests across the nation.

The National Iranian Oil Refining and Distribution Company (NIORDC), a department within the ministry, has released around 900 million liters of strategic gasoline reserves into the market in an effort to make up the deficit. An informed source disclosed that the country's reserves now stand at approximately 500 million liters, barely enough for more than four days in the event of any production-related disruptions.

The source added that there are challenges for gasoline imports both domestically and internationally, leading to a consistent reduction of gasoline distribution in various regions of the country.

Both Oil Minister Javad Owji and NIORDC Manager Ali-Akbar Nejadali have confirmed the supply restriction. Nejadali explained that in light of increased summer travel and to ensure a steady distribution and prevent station closures, a new measure has been introduced, limiting each refueling session to only 30 to 40 liters.

Iran International reported in late July that the government has postponed tighter fuel rationing implementation due to the approaching anniversary of last year's anti-regime protests in September.

Earlier in the month, NIORDC deputy manager Ali Ziyar said that the average daily consumption of gasoline has hit 124 million liters, indicating a 20-percent increase compared with the previous year. “In recent years, the maximum annual growth in gasoline consumption has been seven percent, but this year we have suddenly experienced a 20 percent increase in consumption,” he said, tacitly acknowledging that a large amount of fuel is being smuggled out of the country. He also stated that the daily gap between production and consumption is 17 million liters.

The government, which controls one of the world's largest oil and gas reserves, sells gasoline at extremely low, subsidized prices, charging less than 10 US cents per gallon, or less than 3 cents per liter, while neighboring oil-producers have much higher prices, in line with international market rates. Second only to Venezuela, Iran has the world’s cheapest gasoline price. The extremely low fuel prices leads to small and large-scale smuggling to neighboring countries.

Back in March, Iran International unveiled a classified document detailing a late February meeting at the presidential office. This document revealed that dangerously low levels of strategic fuel reserves forced major refinery repairs to be postponed to maximize short-term production. Officials were advised to avoid any public statements or suggestions that could be construed as intentions to raise current fuel prices, fearing it might ignite public discontent.

One of the main reasons that the Islamic Republic has not managed to increase prices in the midst of the current economic crisis is because it faced the worst wave of unrest in years since September 2022. A fuel price hike would risk fanning the flames of unrest further. For years there has been talk of adjusting prices, but since 2018 Iran’s currency has dropped 12-fold and any increase needs to be huge to be meaningful in US dollars.

In November 2019, a government decision to increase fuel prices by 50–200 percent triggered a cycle of protests and unrest across the country that lasted for over two weeks. Regime forces killed at least 1,500 civilians, in the worst such crackdown in Iran.

While the country is hugely dependent on the revenues from crude oil exports, due to sanctions and mismanagement, it has failed to modernize the energy sector, with power shortages persisting most of the year. Systemic corruption also further cripples the weak system. The situation has been grave in recent years but since the administration of Ebrahim Raisi assumed office in 2021, the entire energy management system is going haywire, drawing backlash from not only the public but even regime insiders.

In recent days, rumors of an impending gasoline price increase have once again ignited, prompting a rush of people to gas stations.

According to government media reports, two gunmen attempted to enter the premises of Shahcheragh, which was the site of another shooting incident last year. However, they were met with resistance from security guards.

Subsequently, the gunmen unleashed a shooting spree that claimed the lives of at least two guards and two visitors, while also causing injuries to several others, IRNA reported. Different Iranian media outlets have presented conflicting figures regarding the number of casualties.

As of now, one of the shooters has been apprehended, while the other perpetrator remains at large, Fars news reported without any information about their identity.

In July, Iran publicly hanged two Afghan men who were accused of involvement in an attack on Shahcheragh last October, resulting in 15 deaths and 20 injuries.

The lone gunman, armed with an assault rifle, entered the shrine and opened fire, and was subsequently shot and wounded. The government reported he died in hospital, identifying him as a Tajikistan citizen. The two men who were hanged on July 8 were alleged to have directly participated in the "arming, procurement, logistics, and guidance of the main perpetrator" of the terrorist attack.

The October attack on Shahcheragh coincided with anti-regime protests in Iran. This prompted speculation and accusations that the government orchestrated the attack as a diversion from the protests and as a pretext for further crackdown.

In a perplexing turn of events, the Islamic State group claimed responsibility for the attack, which fit the government narrative of Iran being under attack by extremists.

Residents of the region reported repeated blasts which came from "the warehouses of pro-Iran militias" in a mountainous area east of the capital, said the Britain-based Syrian Observatory for Human Rights, which has a wide network of sources inside Syria.

The head of the war monitor, Rami Abdel Rahman, said they do not know if the blasts were from an airstrike or ground operation, adding that it was still unclear if anyone was wounded or killed in the explosion. 

Israel has been attacking what it has described as Iran-linked targets in Syria since 2017, to prevent Islamic Republic forces getting entrenched near its northern borders and weapons reaching the Lebanese Hezbollah.

The most recent reported Israeli strike was on August 7, when weapons and munitions warehouses and positions of Iran-backed militias around Damascus were targeted. At least four Syrian army soldiers were killed in the attack.

Iran intervened in the Syrian civil war in 2011 to save Bashar al-Assad’s regime, which had close ties with Tehran and allowed weapons and assistance to flow to Hezbollah in Lebanon. With crucial Iranian and Russian military assistance Assad has regained most of the territories lost to the rebels but remains highly dependent on Moscow and Tehran.

Iran says its officers serve in an advisory role in Syria at the invitation of Damascus. Hundreds of Iranian forces and thousands of proxy militiamen including senior officers have been killed in Syria during the war.

Pointing to "various forms of corruption in the government's management system," the Jomhuriye Eslami (Islamic Republic) daily recommended that government officials heed well-wishers and refrain from attributing "all of the country's problems to the enemies."

The newspaper accused government officials of isolating themselves within a bubble, entangled in illusions detached from societal realities. The daily also recommended that officials break free from this isolating bubble to reengage with the broader society.

Jomhouri Eslami stated that President Ebrahim Raisi's mandate aimed to rectify the corruption and deviations from principles during the populist government of former President Mahmoud Ahmadinejad (2005-2013). However, not only has this objective gone unmet, but the public also learns of fresh corruption cases within the government on a daily basis.

The conservative publication argued that given the prevailing circumstances, certain individuals become entangled in financial corruption due to their struggle to meet basic needs. Conversely, others succumb to political, cultural, and ethical deviations due to their excessive wealth.

However, the paper did not underscore the fact that the opaque political system, built upon loyalty to the regime, allows officials to engage in corruption and amass personal wealth.

It subsequently cited the recent "sex scandals involving certain prominent cultural officials in the country" and the "involvement of other officials in bribery, embezzlement, and money laundering," asserting that these incidents signify the nation's deteriorating state. The publication added that "last year, around 120 officials were apprehended for financial corruption, and halfway through this year, the tally has already reached 144."

In July, there was widespread outrage among Iranians as successive videos surfaced, revealing officials responsible for upholding moral standards and religious norms engaging in same-sex activities, a grave violation under Sharia law.

The daily further stated that these figures are alarming for a government that claims to be Islamic.

Meanwhile, Mostafa Derayati, a leading member of the reformist Unity of Nation Party told Rouydad24 website that "The government has ostracized the country's most capable officials and has handed over the affairs of the state to inefficient individuals."

Adding that the current presidential administration is filled with inefficient officials, Derayati argued that capable figures were pushed into isolation when the hardliner Guardian Council disqualified tens of moderate and reformist candidates in the 2020 parliamentary and the 2021 presidential elections.

"It was evident that the governance of the nation was transitioning to a group of individuals lacking analytical acumen and the capacity to address the country's challenges," he remarked.

Derayati, a reformist member of the Islamic Studies Center, reiterated that today, even those who supported President Ebrahim Raisi in the 2021 elections are criticizing him. "In fact, the Raisi administration's performance has been so full of mistakes during the past two years that it is really hard to defend his government." He added, "We have handed over the affairs of the state to a government whose president has no executive experience. It was clear from the very beginning that he knew very little about management."

Another critic, lawmaker Ahmad Alirezabeigi, asserted that the statements made by Raisi's aides indicate either a lack of a comprehensive strategy for governing the state or, even if such a strategy exists, they lack the financial resources required to implement their envisioned objectives.

According to CNN sources, Iran’s $6 billion, earned from oil sales before the US reimposed sanctions on Iran in 2018, would go through Switzerland before getting to Qatar.

The funds, in a restricted account in South Korea, will be put in restricted accounts in Qatar, from where they will be readily available for “non-sanctionable trade” of goods like food and medicine.

Haaretz said the path of transferring this money is complex and convoluted, and required separate negotiations that took place with the participation of Oman, Britain and Switzerland, in addition to Qatar. It added that the six billion dollars have already moved from South Korea to a Swiss bank, deposited into a special account.

The US Treasury will be heavily involved, as the transfer of funds is expected to take weeks to complete particularly because the US is not lifting any sanctions in order to facilitate the transfer, CNN sources said. Haaretz, however, said the US Treasury is now searching for an option to expedite the process.

White House spokesperson John Kirby said that “there will be a rigorous process of due diligence and standards applied with input from the US Treasury Department."

However, it is not clear how the US will control the disbursements of the funds, which will be kept in six Iranian bank accounts in Qatar in euros, as any transfer of funds will be outside US control of dollar-denominated transactions.

Earlier, Iran's foreign ministry and government media insisted that the unfrozen funds would be under Tehran's direct and unrestricted control.

Five American citizens, already transferred from Tehran Evin prison to a hotel, will be allowed to leave Iran once the funds are unfrozen.