Russia the 'Main Loser' of Iran's Return to Oil Market

In Iran's efforts to resolve its nuclear crisis, Russia has been Tehran's best ally and supporter. However, if Iran reaches an agreement with the international community, Russia will need to reconsider its supportive stance. According to Bloomberg, based on discussions with oil market experts, oil company executives, and international banks, if a nuclear agreement is approved, international sanctions are lifted, and Iran returns to the global oil market, Russia, alongside the U.S. and Saudi Arabia as major crude oil producers, will suffer the most. Many experts believe that Iran will directly compete with Russia in the European energy market. Following the European Union's sanctions in 2012, Iran's oil production and energy transactions with Europe were banned. Additionally, due to U.S. banking and financial sanctions against Iran, the country's crude oil production decreased from 3.6 million barrels per day in 2011 to about 2.5 million barrels in 2014. A manager of a petroleum products company in Greece stated, 'Iran's return has increased heavy crude oil in the market, which is positive for European refineries.' Before the EU and U.S. sanctions, this large Greek company sourced 25% of its crude oil needs from Iran. However, after the cessation of Iranian oil exports to Europe, Russian Urals oil has replaced it, now making up 30% of the company's purchases. He believes that Iran will directly compete with Russia in the European energy market. Bloomberg adds that although Iran and Russia compete in the energy market, they are close allies in regional and international politics. Russia has provided Iran with advanced weapons, technology, and nuclear knowledge and has tried to persuade other global powers to agree to the nuclear deal and lift sanctions on Iran. Besides Russia, the return of Iran to the global oil market will also challenge other oil producers in Africa and South America in European markets. Oil market experts note that other factors, such as the halt of Syrian oil exports due to the civil war, the irregularity of Iraqi oil exports via the Mediterranean pipeline, and the severe decline in oil exports from Libya and South Sudan due to armed conflicts in those countries, must also be considered. The Iranian government has shown that it wants to quickly revive its old oil customers. Bijan Namdar Zangeneh, Iran's oil minister, stated in May that the country's priorities are Asian and European markets. In a letter to other OPEC members during the organization's June 5 meeting, Mr. Zangeneh urged them to facilitate an increase in Iran's production quota to 4 million barrels per day, which was Iran's production level in 2008. The specifications of Urals crude oil are similar to Iranian oil, which was exported to European refineries before the imposition of international sanctions. Some experts believe that the main competitor for Iranian oil in European markets will likely be Urals oil. Iraqi Kirkuk crude oil, which resembles Iranian and Urals oil, will also not be spared from competition with Iranian products. The increase in Iranian crude oil exports will also pressure West African countries' exports. These countries, which are among the main sellers of crude oil to the U.S., are currently under pressure due to the increase in shale oil production in the U.S. It seems that European refineries are already preparing to purchase and import Iranian oil, and some European oil companies have been in constant contact with Iran for several months.