Although United Nations sanctions do not forbid buying
Iranian oil, the United States has pressed hard for governments and companies
to stop dealing with Tehran. Many oil majors and banks have abandoned their
dealings since then.
US President Barack Obama visited India last month and said
he supported its bid for a permanent UN Security Council seat.
The Reserve Bank of India said in a statement on Thursday
Indian oil imports payments to Iran will have to be settled outside the
existing Asian Clearing Union (ACU) mechanism, which involves the central banks
of India, Bangladesh, Maldives, Myanmar, Iran, Pakistan, Bhutan, Nepal and Sri
Lanka.
“It has now been decided that payment for import of oil and
gas should be settled in any permitted currency outside the ACU mechanism,” the
statement said.
Indian oil industry sources said the change notified by the
RBI could hurt their imports as it would force NIOC and Indian firms to find a
common platform — probably a European bank — for settling trade, instead of the
central banks.
“Somewhere we (National Iranian Oil Co. and Indian firms)
have to converge otherwise there will not be any trade,” said a source at one
of the Indian oil firms with direct knowledge of the matter.
Iran is a major oil producer and the only exporter among the
ACU block, while India is the biggest importer among them. Trade with Iran faces
credit hurdles due to sanctions.
India imported about 426,000 barrels per day from Iran in
2009/10, but this may decline as major refiner Reliance Industries has not
renewed its term deal.
The sanctions make it difficult to open letters of credit,
which are often required for the buyer and seller of a cargo to guarantee
payment upon delivery or at an agreed future date.
A second industry source said the move could make imports
extremely difficult.
Asked if the move by RBI would make Iranian crude oil expensive,
this source said: “No. I don’t think it would be easy to import at all.”
Finding an alternative bank for Iranian oil trade instead of central banks will
be difficult, this source said, adding EIH Bank of Germany, which used to act
as a facilitator for such transactions for the ACU members, has been brought
under sanctions.
The US Treasury Department in September sanctioned
Tehran-owned European-Iranian Trade Bank AG, called EIH Bank in Germany, for
facilitating billions of dollars of transactions with Iranian banks that the
United States and European Union have blacklisted for aiding Iran’s nuclear or
missile programs.
