NEW DELHI: Using the one-month window provided by the temporary exemption from US sanctions, Indian refiners bought Iranian oil and settled the payments in Chinese yuan, people familiar with the development said on Friday. Iran insists on paying in Chinese yuan for oil to circumvent US-led financial sanctions that restrict its access to the dollar-dominated global banking system, prompting Indian Oil Corporation and Reliance Industries to choose this route. While the US dollar was the preferred currency for import payments, India previously paid for Russian oil in rupees and UAE dirhams. Reports indicate that India also made payments for some quantities of Russian crude in Chinese yuan last year in the wake of Western sanctions. For Iranian crude, payment was made by ICICI Bank through its Shanghai branch, with no other banks in China. The refineries and ICICI Bank could not be reached for comment. When asked, Sujata Sharma, Joint Secretary, Ministry of Petroleum, said that oil marketing companies are making all efforts to arrange shipments so that domestic demand can be met. She said they were working within government rules.
The Trump administration allowed an exemption from US sanctions to purchase Russian and Iranian crude already at sea, to calm prices that had risen due to the conflict in West Asia. Using this window, state-owned and private refiners have purchased Russian and Iranian oil to fill supply shortfalls. Officials said more crude shipments were expected to arrive from Tehran before the exemption expires on Sunday.