September 10, 2014

Russia is in talks with Iran to create an exchange of $500 million worth of Russian wheat for Iranian oil in a move to circumvent sanctions placed against both countries – against Russia for the Ukrainian crisis and against Iran for its nuclear program.  United Grain Company – Russia’s state-controlled grain trader has stated that it is ready to supply between 1-2 million tons of grain to Iran per year in exchange for oil.  In January, sources claimed that the two countries were negotiating a deal worth $1.5 billion, but since that time figures have decreased to a fraction of that amount.  Washington has warned against any exchange deals stating that it would negatively affect talks concerning Iran’s nuclear program.  Aside from political ramifications, Iran has experienced a poor harvest and is expected to need to import between 5-7 million tons of grain while Russia is expecting its largest wheat crop in six years and has already harvested 50 million tons from 64% of its planted acreage.  Kazakhstan also plans to increase grain supplies to Iran by five-fold to 2.5 million tons per year once the Iranian railroad between Kazakhstan, Turkmenistan, and Iran is completed.

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