Investigation of Sanctions and Oil Price Effects on the Iran-Russia Trade by Using the Gravity Model

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Abstract
Sanctions introduced in 2006 are said to have had a crucial eff ect on the Iranian economy in the last decades and have aff ected the economic relations between Iran and the rest of the World. It has been asserted repeatedly that sanctions against Iran have been hindering its foreign trade and its access to the global market and that sanctions have caused Iran to become less globalized and more isolated. As Iran's economy is highly sensitive to oil prices due to its high reliance on oil revenues it might aff ect Iran's trade with other nations. Our study explores how much various sanctions (fi nancial and nonfi nancial) and oil price have aff ected the foreign trade of Iran with Russia during 1994-2013. Th e research provides a detailed study of the impact of fi nancial and non-fi nancial sanctions on Iran-Russia foreign trade and relation of oil price and Iran-Russia foreign trade. Th e fi ndings show the negative relationship between fi nancial, non-fi nancial sanctions and oil price shocks with the Iran-Russia trade. Refs 37. Figs 6. Tables 7.