Russia’s blitzkrieg on Ukraine and endgame talks to restore the Joint Comprehensive Plan of Action (JCPOA) Iran nuclear pact have become increasingly interlocked in an emerging new geopolitical order.

But hopes that a new nuclear deal will allow Iran to quickly replace Russian energy supplies to the West are likely premature for a multitude of reasons.  

In remarks last weekend, Russian Foreign Minister Sergei Lavrov asked the US for written guarantees that the JCPOA’s revival be made contingent on Russia being allowed to maintain trade and economic ties with Iran exempt from US sanctions over its Ukraine invasion.

Many analysts interpreted the request, made after months of negotiations and with a new deal in sight that would lift a swathe of sanctions on Iran, as Moscow’s attempt to take the JCPOA hostage and blackmail the West.

On paper, Iran shouldn’t be profoundly affected by the war in Ukraine as it doesn’t share borders with the Eastern European country and also is not expected to be a destination for the 1.5 million Ukrainian refugees fleeing the fighting.

But Iran’s intelligentsia and Western pundits have opined that if Iran plays its cards right it can leverage Russia’s new isolation from the global financial system and energy markets to revive its own ailing economy, including through energy exports that fill the breach opened by sanctioned Russian supplies.

Iran holds the world’s second-largest natural gas reserves, trailing only Russia. It also sits on the world’s fourth-largest proven oil reserves. But years of Western sanctions on Iran’s energy exports have gravely hampered both industries.

If the JCPOA is revived, the Islamic Republic could quickly re-emerge as a principal oil and gas exporter, similar to the period after the original signing of the nuclear deal when the economy recorded a whopping growth rate of 12.5% in 2016-17.

Experts believe the tumbledown state of Iran’s energy infrastructure and the fact that nearly 80% of the natural gas it produces is consumed domestically means it cannot immediately replace Russian supplies. This partly explains why Europe is dithering on imposing full-blown sanctions on Russia’s energy exports, particularly its natural gas, which accounts for 40% of Europe’s imports.

“In the case of natural gas, there are profound infrastructure obstacles as Iran is connected by pipeline only to a few regional countries, first and foremost Iraq and Turkey, and does not have any LNG terminals,” said David Jalilvand, managing director of the Berlin-based research consultancy Orient Matters.

“Moreover, Tehran struggles to meet domestic demand for natural gas and simply does not have the capacity to ramp up exports in the short- to mid-term,” he said.

Iran’s energy industry could be a big winner of US sanctions on Russian oil and gas. Photo: Fatemeh Bahrami / Anadolu Agency via AFP

“Even if Iran were to overcome its capacity and infrastructure problems, Tehran is unlikely to challenge Russia in its key export market, Europe, but would try to gain a foothold in the Asian market, where long-term demand growth is strongest,” Jalilvand added.

But Iran’s ambition to quickly regain its lost global market share suggests it will seek to rush back as a major player, particularly now that crude prices are shooting up to unprecedented levels near US$130 per barrel.

Scott Montgomery, a geoscientist and affiliate faculty member in the Jackson School of International Studies at the University of Washington, believes in the event of the successful restoration of the JCPOA that Iran will be able to replace Russian oil exports in six to eight months, probably by the end of 2022.

“My estimates suggest that if sanctions were lifted now, Iran could produce enough to export an additional 1-1.2 million barrels per day pretty much right away, and possibly double this before the end of 2022. If most of this went to Europe, the great majority of Russian oil, [namely] 2.4 million barrels per day could be replaced,” he told Asia Times.

“Within a few years, say by 2025 or 2026, Iran’s production capacity could go back above 4 million barrels per day or higher.”

Montgomery, who has followed the JCPOA negotiations closely, reckons Iran’s reconnection to the world through a new nuclear deal would spark an economic recovery for the country and be a blessing in disguise for the West by rationalizing their close cooperation on energy security matters.

“The Iranians are canny. They know the West, as well as the East, badly want the deal to work, so Iran can again become a major exporter and help stabilize the global oil market in particular. This reality is now heightened no small amount by the prospect of a ban on Russian oil and gas exports to the West,” he said. (The US and UK have already sanctioned Russian energy exports.)

Yet despite the potential for Iran to overcome its economic stagnation and geopolitical isolation after years of crippling sanctions, there are few, if any, indications that Teheran would quickly seek to hedge its diplomatic bets by creating new coalitions outside of its ties with China and Russia.

Alex Vatanka, director of the Iran program at the Middle East Institute in Washington, told Asia Times for Iran to become a major energy supplier to Europe a single factor would be required, which is “a political decision in Europe and in Tehran to see each other as strategic partners in the energy sector as supplier and consumer.”

But, he argues, the political will is not there at the moment.

“[Iranians] never have had a solid strategic plan to become a super energy player. They have all the qualities of a global energy player but their revolutionary Islamist foreign policy will keep them out of world markets,” he told Asia Times.

An Iranian seaman holds Iranian and Chinese flags during a ceremony at Chabahar on the Gulf of Oman during Iran-Russia-China joint naval drills in 2019. Photo: AFP / Iranian Army Office

“Instead, Tehran’s hope is that its Look East policy [regarding] China will save its energy sector. China might save Iran’s energy sector, but there is little point in Iran becoming a single-customer oil player,” he added.

Other observers note that Iran is unlikely to pivot away from its Look East policy since its mistrust of the US and Europe has been hardwired in the Raisi administration’s mentality.

“It’s difficult for me to see Iran rolling back its strategic shift to the East even in the event that the JCPOA opens up new opportunities for dealing with the West,” said Tom O’Connor, a Newsweek award-winning senior writer.

“Iran is far from alone in the region from looking in this direction and, for Iran especially, the experience under sanctions has created a deep-seated bitterness among Iranian policymaking elites and has affected the perceptions toward the West of even many everyday civilians, many of whom had an affinity for the US and Europe despite longstanding geopolitical tensions,” he told Asia Times.

“Given the bad blood between the West and Iran over the failure of Tehran to reap the benefits of the JCPOA as well as the US killing of Major General Qassem Soleimani in January 2020, it should be no surprise to US policymakers that Iran would continue to see added benefit in siding with Russia over the West,” he told Asia Times.

To be sure, a JCPOA revival is not yet a foregone conclusion. Iran’s senior negotiator, Ali Bagheri Kani, is reportedly once again in Tehran on a brief respite from talks in Vienna to seek consultations, which analysts speculate is mostly related to the new Russian demands.

“If the agreement falls apart, Iran will not receive the economic benefits that it has been after throughout these negotiations, so I would imagine that these new Russian demands – particularly if they turn out to not be directly related to the implementation of JCPOA provisions – will be creating some significant frustration, not just in DC and European capitals, but also in Tehran,” said Darya Dolzikova, a research fellow at the Royal United Service Institute’s Proliferation and Nuclear Policy Program.

“This may force Iran to work more closely with the other negotiating parties to figure out a way to save the agreement, if Russian demands threaten that. I also wonder what lessons Iran is learning about dealing with Russia from watching its invasion of Ukraine and now seeing these new demands in Vienna,” she told Asia Times.

“The two countries have always had a complicated relationship, but I would imagine Russia’s recent actions will only multiply any doubts that may exist in Tehran over placing trust in its dealings with Russia.”

The notion that Iran and the West, despite long being at daggers drawn, have new economic reasons to finalize the JCPOA is echoed by Stephen Zunes, a prominent Middle East expert and professor of politics and international relations at the University of San Francisco.

“Washington fears that shortages or dramatically higher [energy] prices could tempt importers to oppose or evade sanctions against Russia, so the United States now has some incentive to end its policy of blocking Iran from much of its international trade,” Zunes said. “There is now an extra incentive for both sides to try to move forward.”

Iran’s nuclear program has undermined its energy potential. Photo: AFP / Iran’s Revolutionary Guard / Sepah News

Zunes believes the road to the nuclear deal’s renewal will be bumpy given what the radicals in Iran and hawks in Tel Aviv and Washington could still do to derail diplomacy.

“The withdrawal from the agreement by the Trump administration, threats by Republican leaders to abrogate any future amendment if they return to power, and the slowness of Biden’s negotiators to compromise have all been gifts to Iranian hardliners, who themselves have also been reluctant to compromise.

“Both the Europeans and the Americans have a common interest in restoring the JCPOA and easing the impact of a cutoff of Russian oil and gas exports, so it is unlikely to cause much of a wedge between them,” Zunes added.