Taliban Approaching Deal to Buy Russian Oil, a Boon to Putin's Economy

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

A delegation of Taliban officials are in Moscow negotiating a deal with their Russian counterparts to secure imports of wheat, gas and oil, Reuters reported Monday. The negotiations come as the Taliban seek to thaw the diplomatic freeze that followed their armed takeover of Afghanistan last year and as Russia sidesteps Western sanctions due to its invasion of Ukraine.

An unnamed source in Afghanistan's office of the Minister of Commerce and Industry told Reuters that the contracts are expected to be finalized soon.

No government has formally recognized the Taliban's government after the hardline Islamist group seized power after the U.S. withdrew its presence last year. But Russia, China and other countries antagonistic toward the U.S. have kept their embassies open in Afghanistan's capital city of Kabul. Saddled with severe economic sanctions since the war began in February, Russia has also hosted talks with Taliban trade officials.

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

Afghanistan already gets the majority of its food and oil from Russia and trade between the two amounts to $200 million annually, according to Afghanistan's TOLOnews. 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 saw roughly $93 billion in revenue from fossil fuel exports during the first 100 days of its invasion of Ukraine, according to a report from the Centre for Research on Energy and Clean Air.

Demand for Russian energy was driven primarily by China and India, according to the report. Additionally, Germany, Italy, the Netherlands, France and Poland also helped keep demand for Russian energy high despite the sanctions, the report said.

"Import volumes fell modestly in May, around 15% compared with the time before the invasion, as many countries and firms shunned Russian supplies," stated the report.

Reduced demand and lower price for Russian oil cost the country about $200 million a day in May, according to the centre's data. But rising demand globally for fossil fuels has meant 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 come down next year as markets adjust, according to the June Oil Market Report from the International Energy Agency.

"Global oil supply may struggle to keep pace with demand next year, as tighter sanctions force Russia to shut in more wells and a number of producers bump up against capacity constraints," the report said.

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

Nooruddin Azizi, the Taliban's acting minister of Commerce and Industry, told TOLOnews that most of the Afghan and Russian banks remain under sanctions, meaning a third country will facilitate the exchange of money.

"Some of our technical teams are still in Russia and they want to work on the details, such as what kind of money transfers we may have," said Azizi.

Newsweek has reached out to the Russian government for comment.