India trying to ensure constant supplies of crude from Iran: Jaipal Reddy

The Indian government is trying to ensure nonstop crude oil supply from Iran, on the contrary Iran had warned that it may stop the crude oil supply to Indian refineries if months of unpaid bills are not settled soon. The Indian oil minister S Jaipal Reddy on June 5 said, “India is trying to ensure uninterrupted supplies of crude from Iran.”

'There is a problem. We are sorting it out. We are optimistic about finding the solution and ensuring uninterrupted supply of oil,' S Jaipal Reddy said.

The payment problem has arisen in the wake of an RBI circular in December 2010, requiring all trade and other current account transactions with Iran to be settled only in permitted currencies outside the Asian Clearing Union (ACU) mechanism. With the ACU mechanism being stopped, all dollar payments to exporters were then temporarily routed through the US banks, with euro payments similarly being done through European banks.

However, since January, US and European banks had blocked the transactions to Indian exporters due to international sanction on Iran. Because of this, Indian banks are not able to accept the Letter of Credit from such transactions.  The two way trade between India and Iran is around $14 billion, India imports around $12 billion worth goods, mainly crude oil, and India export around $2 billion.