By Manoj Kumar and Nidhi Verma
A delegation from Iran is in New Delhi this week in the latest attempt to work out a way for India to pay for its oil imports, five months after a regional clearing mechanism was unilaterally halted by India’s central bank under U.S. pressure.
“It is a continuous process. We are hopeful of a resolution by tomorrow,” Nabizadeh said.
Iran supplies India with some 400,000 barrels per day (bpd) of oil, second only to Saudi Arabia, filling around 12 percent of the fast-growing Asian giant’s needs.
Shipments have not been halted but the two sides have struggled to find a replacement method of paying for them which does not contravene international sanctions.
India is Asia’s third-largest oil consumer and has one of the highest inflation rates in the region. Its costs for crude could climb as international prices have soared on worries over disruptions to supplies fuelled by conflict in Iran’s fellow OPEC member Libya.
One solution for payments to Iran currently under discussion is to use a basket of currencies, including the yen, sources who were in the meeting told Reuters.
That possibility was not ruled out by the deputy governor of Iran’s central bank when asked whether such a mechanism was on the table.
“We are discussing now. We are discussing how to resolve it,” Hamid Borhani said.
Earlier this year, Germany allowed India to pay for the oil via Hamburg-based EIH bank which handles international trade for Iranian companies.
But India halted that conduit in early April after discussions with German Chancellor Angela Merkel and EIH has since come under EU sanctions. (Editing by Jo Winterbottom and Keiron Henderson)
