Iran has asked India to pay for oil partly in yen as the two nations seek an agreement on how to maintain trade amid tightening global sanctions, according to three people with knowledge of the matter.
India proposed to pay its second-biggest oil supplier in rupees through a bank account in the South Asian nation, said the people, declining to be identified because the information is confidential. Iranian officials sought partial payment in yen because they’re concerned they may not get sufficient value from the rupee, which isn’t fully convertible, according to the people.
The nations have struggled to preserve $9.5 billion in annual crude trade after the Reserve Bank of India dismantled a mechanism used to settle payments in euros and dollars in December 2010.
Transactions are currently routed through Turkiye Halk Bankasi AS, based in Ankara, which has told Indian refiners it may no longer be able to act as an intermediary, four people with knowledge of the matter said.
European Union foreign ministers agreed to ban oil imports from Iran, starting July 1, as part of measures to ratchet up the pressure on the Persian Gulf nation’s nuclear programme, Dutch foreign minister Uri Rosenthal said on Monday.
Refiner shares
Shares of Indian buyers of Iranian oil rose in Mumbai trading. Mangalore Refinery & Petrochemicals Ltd, Iran’s biggest Indian customer, rose 2.1 per cent, while Essar Oil Ltd climbed 2.9 per cent and Hindustan Petroleum Corporation gained 0.7 per cent.
“This issue has been a concern for investors because it can distort the market for oil and affect these companies if they have to get oil from elsewhere,” Jagdish Meghnani, an energy analyst at Emkay Global Financial Services.
