The U.S. sanctions on Iran continue to raise concerns across the world, particularly among the main importers of Iranian oil. The U.S. determination to oust Iran out of energy markets and reduce the Persian Gulf nation's oil exports to zero have complicated the energy markets and make it difficult for Iranian oil importers to find a supply.
Turkey, which has significantly reduced oil imports from its neighbor, and Iran are planning to join INSTEX, a channel to facilitate trade finance with Iran and established by France, Germany and the U.K., or to create a similar mechanism. According to information obtained from official sources, Turkey and Iran are working on a foreseeable and sustainable solution that can prevent any negative developments.
President Recep Tayyip Erdoğan has repeatedly emphasized that U.S. sanctions on Iran only jeopardize regional security and stability. Turkey argues that the problems cannot be solved by the imposition of sanctions and expresses its support for a rule-based international system. Turkey and Iran aim to reach $30 billion in bilateral trade by removing the existing obstacles.
Turkish entrepreneurs claim that Iran is one of the best alternative markets for oil and plastics raw material due to its geographical proximity. They express the urgency to form a mechanism to bypass U.S. sanctions and Iran and finance trade. The Turkish traders also point out that the U.S. could be more aggressive and tighten the grip on Iran by strengthening sanctions, which could further impede Iran's trade with Turkey and the EU.
According to the Energy Market Regulatory Authority (EMRA), Turkey's oil imports from Iran in April, before U.S. waivers expired in early May, totaled 437,129 tons while the country's total crude imports were at 2.4 million tons. Oil purchases from Iran in April accounted for 18 percent of Turkey's total crude imports.
INSTEX, however, has not effectively worked so far. INSTEX will be of limited use but it has highlighted a welcome distance between Washington and its allies, Iranian Foreign Minister Javad Zarif said Monday. The EU said last week INSTEX payment mechanism was finally operational and that the first transactions were being processed.
Meanwhile, Iraq was also reported to be working on a "loophole" to continue buying gas and electricity from Iran despite U.S. sanctions. The special purpose vehicle (SPV) would allow Iraq to pay for imported Iranian energy in Iraqi dinars, which Iran could use to exclusively buy humanitarian goods.