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Expansion of energy exchanges between Russia and Iran as two countries possessing respectively 37 percent and 15 percent of gas and oil reservoirs in the world can pave the way for diminishing petrodollar dominance if Moscow and Tehran omit dollar in economic interactions.
The increase of bilateral cooperation between Iran and Russia in oil and gas sectors is of great importance in terms of economic development and can also boost their share of energy markets; therefore, such a coordination can have broad political implications for the future of the world.
The issue is also significant because both nations are suffering from the US-imposed illegal sanctions, thus the collaboration can pave the way for dodging the embargo.
Following Joe Biden’s taking power in the White House, the United States listed Iran, Russia, and China as non-democratic states. In return, Kremlin mentioned in its national security strategy that Washington is seeking to initiate a cold war.
As a result, the Russian authorities plan to promote non-dollar transactions in order to defuse the US sanctions, so use of national currencies has been emphasized in bilateral and multilateral relationships.
Iran has also been under severe American sanctions under the pretext of Iranian nuclear case for years. The embargo targeted oil and gas industry much more than other sectors in Iran with the aim of preventing from importing technology and money as well as decreasing Iranian oil export to weaken the Islamic Republic’s economy.
Given these facts, promoting effective cooperation between Russia and Iran can decline the domination of petrodollars on oil market.
Russia, China, and Iran possess big markets and capacities to play key role in oil and gas supply and demand market.
The 25-year cooperation agreement was signed between China and Iran last year, which can turn into a proper ground for expansion of cooperation in different arenas, including oil and gas exchanges.
The recent visit paid by Iranian President Ebrahim Raisi to Moscow and preparation for signing a 20-year strategic agreement will provide both countries with an opportunity to put an end on the petrodollar hegemony.
In the beginning of the Raisi administration, Iran turned into a full member of Shanghai Cooperation Organization (SCO), which can help the Islamic Republic to decrease trade costs and expand economic exchanges.
