Indian refiners settle Iran oil payments in Chinese yuan through ICICI Bank

In a significant, if short-lived, shift in India’s energy trade posture, Indian refiners have been settling payments for Iranian crude oil in Chinese yuan, routed through ICICI Bank’s Shanghai branch. 

The details were reported exclusively by Reuters, citing four sources familiar with the matter.

The purchases were made possible by a 30-day waiver on American sanctions that Washington granted to ease oil prices driven up by the US-Israeli war on Iran. That exemption is now lapsing, which US Treasury Secretary Scott Bessent has confirmed will not be renewed. The waiver on Iranian oil expiring this Sunday, April 19.

Indian Oil Corporation (IOC), the country’s largest refiner, bought 2 million barrels of Iranian crude, its first such purchase in seven years, carried aboard the tanker “Jaya.” The cargo was valued at roughly USD 200 million, Reuters

 reported. Separately, privately-run Reliance Industries was permitted to berth four vessels carrying Iranian oil, of which at least one, the MT Felicity, has discharged its cargo.

Both companies settled these trades through ICICI Bank, which routed funds in yuan via its Shanghai branch into seller accounts. The identity of the sellers could not be established.

The payment structure itself drew notice. IOC reportedly paid around 95 per cent of the cargo’s value against the supplier’s notice of readiness, meaning that once the loaded tanker had entered Indian waters, the payment is made rather than upon actual delivery or discharge, which is the more common practice for oil sourced from sanctioned countries. 

One source described the arrangement as unusual.

India has not purchased Iranian oil since 2019, when Washington’s sanctions pressure effectively shut Tehran out of Indian markets. In the intervening years, Chinese independent refiners – colloquially known as “teapots” – emerged as the dominant buyers of Iranian crude. 

Indian refiners, meanwhile, pivoted sharply toward Russian oil following the West’s sweeping sanctions on Moscow after the 2022 invasion of Ukraine, and have on occasion also used the yuan to settle those purchases.

IOC does not plan to make further Iranian oil purchases, according to one of the sources cited by Reuters

.

Get the latest updates in Hyderabad City News, Technology, Entertainment, Sports, Politics and Top Stories on WhatsApp & Telegram by subscribing to our channels. You can also download our app for Android and iOS.