Uzbekistan likely to purchase cheaper oil from Iran

Oil&Gas Materials 31 October 2017 16:50 (UTC +04:00)

Baku, Azerbaijan, Oct. 31

By Ali Mustafayev – Trend:

Uzbekistan and Iran launched a new level mutually beneficial cooperation in several areas, including oil and transport industries. The countries signed agreements worth $25 million, within the business forum held in Tehran.

The Foreign Minister of Uzbekistan Abdulaziz Kamilov also discussed the prospects of oil cooperation between Iran and Uzbekistan with Iranian Minister of Industry, Mines and Trade Muhammad Shariatmadari.

Uzbekistan’s intention to purchase Iranian oil was unexpected, since the country could continue relying solely on Kazakhstan - the largest oil supplier in Central Asia.

“It seems that one of the reasons that Uzbekistan prefers to buy its oil from Iran instead of purchasing it from Kazakhstan is a cheaper price offered by Iran. Iran needs a customer to sell its oil to, as well as Uzbekistan is looking to buy oil at a lower price. Before the signing of a nuclear weapons pact with world powers, Iran had previously used this strategy, when its oil exports were banned,” the political science researcher and Iran expert from the University of Birmingham, Ali Pishro told Trend.

He added that the current contracts are important for both sides.

"The deteriorating crisis between Iran and the US as well as possible new sanctions against Iran, encourages the Islamic Republic to think of finding new oil customers. Countries that are geographically closer to Iran can be prioritized for Iran," he said.

“If the new US sanctions are approved by the US Senate and indirectly target Iran's oil, then the cooperation in the oil field between Iran and Uzbekistan will become more meaningful,” he said.

Pishro also stressed that Central Asian countries are potentially important for Iran because these countries are still closely related to Russia and given the close relationship between Iran and Russia, Iran can make sure that these countries can be good and reliable economic partners for Iran in the period of possible sanctions.

Uzbekistan’s trade turnover with Iran in the first half of 2017 was $166.3 million. This indicator is not high compared to the results of the previous years, but the recent talks on further expansion of the trade cooperation between the presidents of the two countries illustrates mutual intention to increase the number of economic deals.

Uzbekistan exports many commodities to Iran including cotton, ferrous and non-ferrous metals, fertilizers and chemical fibers. Iran exports construction materials, detergents, foods, tea and fruits to Uzbekistan.