Refiners including state-run Indian Oil Corp., the nation’s largest, have needed to find a new way to pay for Iranian crude after the Reserve Bank of India on December 27 dismantled the mechanism long used to settle oil trades in euros and dollars. The Reserve Bank acted to protect itself from possible US sanctions.
Officials from Indian and Iranian central banks are in talks to settle trades in their domestic currencies, Fakheri said.
Previously, the Reserve Bank subtracted the total value of all sales to Iran from Indian purchases from Iran every two months, paying Iran the net difference. But that meant the bank didn’t know what it was paying for and might run into trouble if some Indian firms were violating sanctions and making the Reserve Bank part of the transaction.
Iran, OPEC’s second-biggest oil producer, has received offers from “some” European and Asian countries to buy the crude it sells to India, Fakheri said, declining to identify the countries.
“We already have had some questions in parliament and the Ministry of Oil,” he said. “If for any reason the Indian government is not in a position to pay, we better find other clients and get paid.”
Some analysts thought Fakheri was just making the threat to try to scare the Indians into finding a new payment mechanism. But others wondered why India had not been able to devise a settlement mechanism in more than a month.
