By Michael Kern

Russia launched for the first time this year fuel-by-rail exports to Iran after the West banned seaborne imports of fuels from Russia over Putin’s invasion of Ukraine, industry sources have told Reuters.  

Russian firms are looking to place their diesel and gasoline exports in countries outside the EU, the former top buyer of Russian fuels, after the bloc and its Western allies placed an embargo on fuel imports from Russia and set price caps for Russia’s diesel and other fuel exports to third countries if the fuels are to be transported or insured by Western companies. 

As the EU embargo came into effect on February 5, Russia had started exporting fuels to Iran via rail for the first time. All deliveries have been made to Iran via Kazakhstan and Turkmenistan, according to Reuters’ sources.  

Russia delivered 30,000 tons of diesel and gasoline to Iran in February and March, sources with knowledge of Russian exports told Reuters. 

Russia and Iran have grown closer ties in recent years, and those ties were further strengthened after the West moved to impose sanctions on many Russian exports, including oil exports.

Iran is also under sanctions and is limited in its oil exports as most buyers – except for China’s independent refiners and Venezuela for swap cargoes – shun Iranian oil for fear of running afoul of the U.S. and are unwilling to risk secondary sanctions. 

Russia and Iran, united by their increasingly closer military ties and the fact that they are both pariahs in international trade due to the Western sanctions, have joined forces to evade the Western sanctions on their exports by constructing a new waterway-railway route from Russia-occupied territories in Ukraine to the southernmost ports in the Islamic Republic. 

Russia and Iran are now looking to expand their trade ties with Asia and are expanding canals on navigable rivers and building railroads to support growing trade, Bloomberg reported at the end of last year. The two countries are estimated to plan to invest $20 billion in the route.