The Wall Street Journal reports:

Iran and Russia are engaged in a fierce competition for sales of oil, refined crude products and metals in India, China and across Asia, as Moscow sells at prices that are undercutting one of its few supporters during the Ukraine invasion.

The struggle over market share between Iran and Russia provides a stark example of how the Ukraine war is rewiring global energy markets, knocking Moscow out of the West only to find it re-emerge elsewhere. India and China—two of the world’s biggest commodities consumers—have stayed largely neutral in the Ukraine war, refusing to join Western sanctions and bingeing on cheap Russian oil and metals at the expense of Iran, which they had previously relied on for discounted products.

The competition has spilled across Asia. It has reached smaller markets, such as Turkey, the United Arab Emirates and Afghanistan. Iran and Russia share an anti-Western political posture but have been battered by Western sanctions—Tehran for its nuclear program and Moscow for its actions in Ukraine. Russian President Vladimir Putin is scheduled to visit Iran on Tuesday in a trip designed to showcase the countries’ close partnership.

Within Iran, the fight has highlighted divisions over the country’s alignment with Russia, which the Tehran government has backed through the Ukraine invasion while the Iranian business community privately simmers over what it sees as unfair competition.

“It’s murderous,” an Iranian trader said of the $30 a ton discounts that Indian and Chinese buyers wanted to match Russian steel prices.

The competition will hurt Iran’s ability to avoid sanctions, reducing its leverage during stalled nuclear talks with Europe and the U.S., said Henry Rome, the deputy head of research at the Eurasia Group, covering global macro politics and the Middle East.

“There is a real disconnect between political and strategic relations” with Russia and the competition in the commodity business, Mr. Rome said, calling oil and products sales “core to the regime’s efforts to withstand economic pressure.”

Over the past decade, Iran had honed ways to avoid sanctions by selling oil to China, which has never fully implemented U.S. nuclear sanctions, and sending processed fossil fuels such as asphalt, petrochemicals, gasoline and liquefied petroleum gas to markets in India, Turkey, the U.A.E. and Afghanistan. [Continue reading…]