The 18-month-old arrangement of India’s euro payments for Iranian crude oil imports through a Turkish bank may come an end as a new set of US sanctions against the Islamic nation comes into force from February 6. The aim of February sanctions measure is for Tehran’s oil revenues to become largely shackled within any country buying oil from Iran.
The new US Treasury sanctions, which go into effect from February 6, bar banks from transferring Iran’s oil revenues from importing nations to Tehran, force Iran to keep its oil revenues in local bank accounts in countries purchasing its oil. The sanctions, if implemented, would mean that National Iranian Oil Co (NIOC) will have to essentially keep all the revenue it earns from selling oil to Indian refiners in UCO or any other permitted local bank. These can be used for buying permissible goods and services.
However, if the euro payments were ended and all of the payments are made in rupees, UCO account balance will swell overnight and the Iran will be encouraged to widen imports of wheat and other commodities. With US sanctions barring sale of any defence or technology intensive equipment, Iranian imports from India will continue to remain low. Also, New Delhi has not allowed Iranians to invest in its securities or debt.
Since July 2011 India has been using euros to clear most of its purchases of Iranian oil through Ankara—based Turkiye Halk Bankasi. As much as 55 per cent of the $10 billion oil imports from Iran are settled through Halk Bank, while the rest of the payments are made in rupees in Kolkata-based UCO Bank.
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