Russia signed a deal to pour $40 billion into Iran’s oil industry, its largest ever investment in the Persian nation.

The investment deal will go toward developing Iran’s gas fields and building new gas-export pipelines. The deal was announced during Russian President Vladimir Putin’s visit to Iran, where he met with Iranian President Ebrahim Raisi, as well as Supreme Leader Ayatollah Sayyid Ali Khamenei. 

According to Iranian state news outlet IRNA, Putin and Raisi “discussed ways for expansion of bilateral relations in different areas, including energy, transit, trade exchanges and regional developments, as well.” 

The visit was Putin’s first international trip since launching his war on Ukraine, showcasing just how important the Russian-Iranian relationship is to him at a time when the West largely is boycotting him.

“Russia turning to Iran for the help speaks volumes about the degree to which both nations, for their actions into different areas of the world, have been increasingly isolated by the international community,” United States National Security Council coordinator for strategic communications John Kirby told CNN.

The investment deal came about after a number of Russian companies, including gas giant Gazprom, made a cooperation agreement with the Iranian regime. 

Private Russian companies also will be investing in the Iranian oil sector, according to IRNA. Overall, Russia already has invested $4 billion in the Iranian oil sector.

“The issue of increasing Russian-Iranian cooperation in the economic sphere is especially relevant in light of the tightening of Western sanctions against Russia,” TASS Russian News Agency reported.

While Russia’s investment in Iran could earn the country some external support after its assault on Ukraine has set it at odds with much of the world, Russia and Iran signed memorandums of understanding on energy cooperation already in January, on a visit to Moscow by the Iranian president. 

“During the visit to Russia, numerous meetings were held with Russia’s deputy prime minister, minister of energy and senior private sector executives in the field of oil and gas, in order to expand joint cooperation,” said Iranian Oil Minister Javad Owji, who accompanied Raisi to Russia in January.

During a visit to Tehran by Russian Deputy Prime Minister Alexander Novak, Russia and Iran signed memorandums of understanding on joint oil and gas projects that will enable Iran to export petrochemicals, and technical and engineering services, to Russia.

The relationship has been growing stronger in a multitude of fields, not just the energy sector. In June, the two countries signed a memorandum of understanding on the establishment of mutual trade centers in Tehran and St. Petersburg to generate trade between the two countries in the energy, transportation, electronics, agriculture, food, pharmaceuticals, and construction sectors.

“We’re on track to raise trade, economic, logistics, investment, financial [and] banking cooperation, despite the unprecedented pressure that Russia is experiencing,” Novak said. 

In addition, Russia and Iran agreed to settle their trade and energy debts in national currencies, instead of the U.S. dollar. They are continuing talks on connecting their electronic payment systems, as well as their financial messaging systems.

In addition, trade between Russia and Iran has been growing in recent years. In 2021, according to Middle East Monitor, trade between the two countries increased by 81% from the previous year, rising to the value of $3.3 billion. 

In January, after visiting Moscow, the Iranian president said that the two countries had agreed to increase trade even further. 

“We agreed to remove trade barriers and boost the economic exchanges between the two countries,” he said. “Currently, the level of mutual trade is not acceptable, so the two countries agreed to increase trade to $10 billion a year. The two countries can take steps to break the dominance of the dollar over monetary and banking relations and trade with the national currency.” 

During his recent visit, Putin also mentioned the burgeoning trade relations between the two countries.

“I am very pleased to be on the hospitable Iranian soil. … We can boast about record figures in terms of trade growth,” Putin said, while meeting with Raisi. 

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