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Russia says any oil-for-goods deal with Iran would follow UN rules Tehran economy stabilizing, to soar if deal reached: IMF

WASHINGTON, April 12, (Agencies): Russian Finance Minister Anton Siluanov said on Friday any oil-for-goods deal between Moscow and Iran would follow United Nations rules on sanctions, not US rules. Siluanov would not say whether a deal had been sealed with Iran. US Treasury Secretary Jack Lew warned Siluanov on Thursday on the sidelines of a International Monetary Fund-World Bank meeting in Washington that any oil-for-goods deal Moscow might strike with Iran could run afoul of US sanctions. “We act on the basis of the decisions made by the United Nations that set sanctions, set product groups which would be sanctioned and we operate within those decisions,” Siluanov told journalists. “There is a nuance. Our American partners have their own legislation which differs somewhat from the provisions set by the United Nations and they follow their own rules.”

Meanwhile, Iran’s economy is stabilizing and will post substantially stronger growth if the Islamic republic reaches a comprehensive deal with world powers on its nuclear program, the IMF said Friday. The International Monetary Fund estimates that Iran’s economy shrank by 1.7 percent in 2013, the second straight year of contraction after the United States and its allies imposed sweeping sanctions. But the IMF projects that Iran’s economy will rebound by 1.5 percent in the current year — even if sanctions relief under a temporary deal proves short-lived — as Tehran undertakes reforms. Masood Ahmed, director of the IMF’s Middle East and Central Asia department, said that Iran’s economic woes were “beginning to level off” but that much depends on whether the country reaches a comprehensive nuclear deal.

“We do think that if there is a permanent improvement in that international environment... this should have an impact in terms of generating growth rates in the medium term that are substantially higher,” Ahmed told reporters at the IMF/World Bank spring meetings in Washington. Ahmed said that Iran has been benefitting from foreign exchange market reforms and a dramatic calming of once-soaring inflation. But he said that Iran needed further structural reforms and to tighten monetary policy. Iran’s new reform-minded government under President Hassan Rouhani in November reached a deal with six world powers to freeze its nuclear program, which some Western officials and Israel charge is aimed at building nuclear weapons.

The United States and European powers in return offered temporary relaxation of sanctions. But President Barack Obama has said that the sanctions would resume if talks on a comprehensive agreement fail. Iran’s crude oil exports have surged to their highest in 20 months, far exceeding a 1 million barrel-per-day limit set by the West under an interim deal on curbing Tehran’s nuclear programme. The International Energy Agency’s monthly report revised February’s global crude imports from Iran upwards by 240,000 bpd to 1.65 million barrels per day, the highest since June 2012. Under an interim deal signed in November between Iran and world powers - known as the P5+1 - that came into effect in January of this year, Iran’s exports are supposed to be held at an average 1 million bpd for the six months to July 20.

Tough international sanctions over the past two years have cut Iran’s oil exports around a half. “The question is whether they are going to continue to test the sanctions,” said Antoine Halff, head of the IEA’s oil industry and markets division. China accounted for 168,000 bpd of the rise in imports in February, India for 93,000 bpd and South Korea for 83,000 bpd. On the other hand, Japanese imports of Iranian oil were revised lower by 103,000 bpd, according to the IEA. “Imports of Iranian oil are running well above 2013 levels for the third consecutive month,” the report said.

The EIA data for February includes sales, not only of crude oil, but also of condensates, a light oil found in natural gas deposits, which are permissible under sanctions, a State Department official told Reuters. It also includes shipments to Syria that do not count toward the 1 million bpd target because it is not one of Iran’s regular oil customers outlined in the sanctions, the official said. “We are comfortable that total exports from Iran of ‘crude oil’ are within the 1 to 1.1 million barrel per day range,” said the official in an email, on condition of anonymity due to the sensitive nature of the sanctions. The Obama administration believes that Iran is unable to sell crude to Syria, but gives it away, and would rather sell the oil to its regular customers. The EIA numbers include “free deliveries where Iran does not receive revenue and do change the economic pressure dynamic,” of the sanctions on Tehran, the State Department official said.

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