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Persian Rug Embargo Lifted

persian rug embargo

After months and years of unfounded rumors, the Persian rug embargo has been lifted.  The embargo has been in place fully since September 2010 as part of an effort to persuade Iran into dismantling their nuclear programs.  Tensions have been high between the US and Iran since the 1970’s, and embargoes have been commonplace.

Persian Rug Embargo Lifted

Iranian and U.S. officials announced on January 23rd that Iran had complied with the terms of last summer’s landmark deal to dismantle its nuclear program and that the sanctions that have crippled the nation’s economy would be lifted. The move will give the Iranian government access to more than $50 billion in frozen assets and oil revenue. It also allows some exceptions to trade embargoes against Iran. (The full trade embargo has not been lifted.)  Of particular interest to us is the ability to now import Persian rugs.

Estimates show that the United States accounted for more than 20% of all of Iran’s rug export prior to the re-enactment of the embargo in 2010.  The lifting of the Persian rug embargo will certainly help oriental rug dealers in the US and Iran, but will the market follow suit?

How will this affect prices?

I’m no oracle, but I think that prices of Persian goods will drop from current levels.  (More supply with slipping demand.)

Throughout the most recent embargo, many oriental rug dealers raised prices on all of the Persian goods, saying that the lack of supply could no longer meet demand.  While this may have been true of exceptional quality high-end pieces, it was not necessarily true of more common pieces.  Supply abounded in the US, even without trade lines remaining open.  The move to raise prices by oriental rug dealers proved a poor decision, and the market for true Persian rugs in the US faltered.

The supply of Iranian rugs is now beginning to trickle in again.  Will the demand for Persian rug return to pre-embargo levels?  Only time will tell.  Personally, this rug dealer doesn’t think so.  Quality and construction techniques from other countries such as India, Pakistan, and Afghanistan have increased to meet or exceed most Iranian rugs that will be imported.  For collectors and consumers wanting an investment-quality piece, exceptionally fine Persian rugs and antiques will dominate the market.  But for consumers looking for antique reproductions at a more affordable price-point, other countries will likely lead the way.

Looking to the future.

On a personal note, I am very excited to see the re-introduction of Persian rug into the market.  The significance of these items not just in the world of textiles and floor covering, but in the art world in general, is impossible to measure.  Over 3000 years of design and art history are represented in each one.  Anytime you can bring something of that nature into your home, it is a great experience.

Stay tuned for more information on this subject.  We will be sure to update as events unfold.

Persian Rug Embargo, are prices justified?

We have a caveat we would like to offer for the rug buyers of the world involving Persian rugs and the current U.S. embargo.  Hopefully this post will give a little insight into the situation and will help you in determining a fair value for any Persian rugs you may be interested in.

On September 29th, 2010, the United States Government enacted an embargo on all products imported from Iran.  There had previously been an embargo in place which included an exception for oriental rugs and certain other goods; it basically banned the trade of technology items.  If you wanted to ship a rug, go ahead… want to trade a Playstation or a laptop computer, you better check with a lawyer first. 

This time around, Persian rugs were included among banned products.  Any and all Persian rugs that were imported into the U.S. prior to September 29 are completely legal and are available for sale.

With a limited supply, and a moderate demand, retailers are now in control of the Persian rug market.  The supply cutoff has caused the price of Persian rugs to skyrocket.  Retailers justify this price increase by arguing that the supply will effectively run out.  As the embargo remains in effect some dealers believe that it will not only become harder to find reasonably price Persian pieces, but that the high-end rugs will disappear.

Here is where we take issue with many of the current actions in the market.  Prior to the current embargo of Persian rugs, other embargos with Iran did exist.  Once the previous embargo was lifted, a massive influx of Persian rugs came into the U.S., and we mean massive.  The shear numbers of pieces not only flooded stores with fine quality and even poor quality rugs, but it bottomed out the prices of Persian rugs.  The demand was the same, the supply was overwhelming.

That overwhelming supply is still here, with many dealers’ warehouses bursting at the seams with average quality Persian rugs.  The existing supply already landed in the U.S. will exceed the demand for many years to come.  And with the current exchange rates and economic situation in Iran, the actual value of these Persian pieces is not higher, but should actually be slightly lower than normal.

The price increase is solely due to the perceived value of the retailers.  The pricing to the customer is not longer based on the price the dealer paid per square foot.

Now don’t get us wrong.  There are a few factors that should raise the pricing on Persian rugs.  The finest pieces were already hard to come by and the embargo has actually created a vacuum for these pieces.  Many dealers, such as myself, have simply taken these pieces out of the showroom and home for themselves.  And many dealers were selling Persian rugs at such a minimal margin that with the lack of supply, the markup had to change.

If you want our advice, think twice before overpaying for a Persian rug because of the embargo.  Do your homework.  Find out what the price was pre-embargo and then decide how much the rarity of similar piece is worth to you.  You could also compare pieces of the same quality from Afghanistan, Indian, Pakistan, or Turkey.  Regardless of what you may hear, the country of origin is usually a non-factor in the quality and construction of a hand-knotted piece.

And of course, as always, if you love it, buy it.