Russia has taken Iran's pioneering sanctions-evasion methods and scaled them to levels Tehran never achieved. Writing in Foreign Affairs, three Carnegie analysts describe how Moscow effectively outperformed the country that taught it the trade, "Hvylya" reports.

According to Alexander Gabuev, Nicole Grajewski, and Sergey Vakulenko, Iran became "a trailblazer in creating the infrastructure for evading sanctions in the oil trade" over the last decade. In the 2010s, Tehran developed a "shadow fleet" - a network of tankers carrying sanctioned oil - along with auxiliary services to handle insurance, money transfers, and other logistics of selling oil from a sanctioned country.

After the full-scale invasion of Ukraine in 2022, Russia adopted these Iranian practices wholesale, relying on the same infrastructure in the Gulf states. Moscow has since taken the illicit trade to new heights, exporting much higher volumes than Iran was ever able to, the analysts note.

The relationship has produced a paradox. Russia's adoption of Iranian methods initially benefited Tehran by increasing the overall number of shadow fleet tankers, which reduced the per-unit costs of maintaining such ships. But Moscow quickly became a direct competitor, selling its oil predominantly to China and India - the same buyers Iran was targeting.

Overall bilateral trade between the two countries has more than doubled since the start of the Ukraine war, from around $2 billion a year to close to $5 billion. But the trade structure remains modest in scope: Moscow mostly sells grain and nuclear fuel to Iran, while Tehran exports fruits, vegetables, and nuts to Russia.

In the energy sector - the backbone of both economies - cooperation has produced remarkably little despite attempts dating back to the early 2000s. Russian oil companies explored opportunities in Iran, but no deals were concluded. State oil company Gazprom considered developing a vast natural gas field in the Persian Gulf, but "the commercial terms were unattractive," the analysts write.

Also read: Gulf States Face Double-Digit GDP Crashes: What Will Replace Their Shattered Economic Model.