TEHRAN – Iran plans to implement an oil-for-good barter trade program based on which the country’s capable private and government-owned export companies will be given oil to sell to potential buyers and import basic goods in return.

The news of this plan was announced last week, by the Oil Minister Bijan Namdar Zanganeh in a joint meeting with the Governor of the Central Bank of Iran (CBI) Abdolnasser Hemmati, the Industry, Mining, and Trade Minister Alireza Razm Hosseini, and the Agriculture Minister Kazem Khavazi.

In the meeting, Zanganeh said that President Hassan Rouhani has accepted the proposal to create a Single Window System to carry out all the necessary processes for the mentioned program, adding: "We will start operations next week.”

Commenting on the matter on Friday, CBI Governor Hemmati also supported the idea and announced plans for increasing the use of oil-for-goods agreements between Iran and other countries.

"The use of barter exchanges of oil for basic goods needed by the country will be expanded along with current methods of trade, to increase the volume of foreign trade and for a better usage of domestic production facilities," Hemmati wrote in an Instagram post.

To learn more details on the matter, the Tehran Times conducted an interview with the Secretary of Iranian Oil, Gas and Petrochemical Products Exporters' Union (OPEX) Hamid Hosseini, what follows is the gist of the interview.

According to Hosseini based on the Oil Ministry decision, several capable candidates among the country’s top export companies will be chosen after assessments by the mentioned ministry and the Industry, Mining and Trade Ministry, and will be authorized to use the mentioned single window system to export oil in exchange for importing the country’s necessary commodities.

“The government should provide the export/importers a list of the country’s needed commodities and allow them to export goods (in this case oil) provided that they import only the commodities determined by the government,” Hosseini explained.

Of course, we have experience in this regard, and this barter trade program has been used several times in the country, for instance, a program exactly like the one recently proposed, was implemented in the Iranian calendar year 1370 (started in March 1991), the official added.

“In the program implemented that year the government allowed traders to export whatever goods they could manage but expected them to import only the commodity items specified by the government,” he explained.

In the current scheme, however, the government has started with crude oil at the first stage, and traders are only supported to export crude oil in exchange for other commodities, according to the official.

Hosseini noted that the supply of essential goods and raw materials required by the production sector is the government's priority in the mentioned barter agreements.

Underlining the CBI governor’s remarks on the matter, he noted that barter trade has been, for long, a way to deal with sanctions while developing the countries' foreign trade.

It should be noted that Iran is already exporting significant amounts of oil despite the U.S. sanctions and other external problems like the pandemic.

The latest reports on Iran’s oil exports indicate that the country increased oil exports sharply in September in defiance of the U.S. sanctions.

Data from TankerTrackers and two other firms indicated exports were rising in September, although the figures fall into a wide range of between 400,000 bpd and 1.5 million bpd, Reuters reported.

So, it is expected that this method, along with other ways of exporting oil, which the country is currently using, would increase Iran’s foreign trade significantly in the near future.

EF/MA