Sri Lanka, Iran Expand Tea-for-Oil Trade Amid Economic Challenges

Iranian tea importers have expressed interest in doubling their tea imports from Sri Lanka during the winter months, aiming to increase the trade from $5 million to approximately $10 million. This proposition was highlighted by Niraj de Mel, the chairman of the Sri Lanka Tea Board, who noted the heightened demand for tea in Iran from December to March, further amplified by the Iranian New Year and Ramadan celebrations. Since initiating a tea-for-oil barter mechanism with Sri Lanka in August 2023, Iran has purchased $25 million worth of tea. This trade arrangement is part of Sri Lanka’s strategy to address its $240 million debt to Iran, planning to settle it within 48 months. De Mel emphasized the success of this barter system, especially as Sri Lanka navigates through a foreign exchange liquidity crisis. Before a decline to $70 million in 2022, Sri Lanka’s tea exports to Iran were valued at about $125 million annually, against Iran’s internal tea demand of 100,000 metric tons per year.