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Taliban near deal to buy Russian oil, a boon to Putin’s economy

Taliban officials and Moscow are finalizing a deal that would allow Afghanistan’s isolated rulers to buy much-needed fuel while helping prop up Russia’s heavily sanctioned economy.

A delegation of Taliban officials is in Moscow negotiating a deal with their Russian counterparts to secure imports of wheat, gas and oil, Reuters reported on monday. The talks come as the Taliban seek to unfreeze a diplomatic freeze that followed their armed takeover of Afghanistan last year and as Russia circumvents Western sanctions over its invasion of Ukraine.

An unnamed source in the office of the Afghan Trade and Industry Minister told Reuters the contracts are expected to be finalized soon.

No government has formally recognized the Taliban government after the hardline Islamist group seized power after the United States withdrew its presence last year. But Russia, China and other countries antagonistic to the United States have kept their embassies open in Kabul, the capital of Afghanistan. Saddled with harsh economic sanctions since the war began in February, Russia has also arranged talks with Taliban trade officials.

Muhammad Younus Muhmand, center, vice president of the Afghanistan Chamber of Commerce and Investment, attends the International Economic Forum in St. Petersburg on June 17, 2022. The Taliban and Russia are reportedly finalizing an agreement for the sale of oil.
Olga MALTSEVA/Getty Images

Afghanistan already gets most of its food and oil from Russia and trade between the two amounts to $200 million a year, according to data from Afghanistan. TOLO News. Russia already offers less expensive wheat and oil, the news outlet reported, citing the country’s Chamber of Commerce and Investment.

Oil exports have been a key economic lifeline for Russia. Despite the sanctions, Russia earned about $93 billion in fossil fuel export revenue during the first 100 days of its invasion of Ukraine, according to a report of the Center for Research in Energy and Clean Air.

Russian energy demand was mainly driven by China and India, according to the report. In addition, Germany, Italy, the Netherlands, France and Poland also helped keep Russian energy demand high despite sanctions, according to the report.

“Import volumes fell modestly in May, by around 15% compared to pre-invasion time, as many countries and companies rejected Russian supplies,” the report said.

Reduced demand and the lower price of Russian oil cost the country about $200 million a day in May, according to data from the center. But growing global demand for fossil fuels has meant that Russia’s average export prices remained 60 percent higher than last year.

But sky-high global energy prices that have helped keep the Kremlin afloat financially could ease next year as markets adjust, according to Oil Oil June. International Energy Agency Market Report.

“Global oil supply may struggle to keep pace with demand next year as tighter sanctions force Russia to shut down more wells and several producers face capacity constraints,” the report said.

While trade deals between Russia and the Taliban may be close, other barriers may prevent the two from exchanging goods.

Nooruddin Azizi, the Taliban’s acting trade and industry minister, said TOLO News that most Afghan and Russian banks remain under sanctions, which means that a third country will facilitate the exchange of money.

“Some of our technical teams are still in Russia and they want to work out the details, like what kind of money transfers can we have,” Azizi said.

news week has contacted the Russian government for comment.

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