Indian refiners pay for Iran oil in yuan via ICICI Bank, sources say

Indian refiners are settling payments for rare cargoes of Iranian oil purchased under ‌a temporary U.S. sanctions waiver using Chinese yuan through Mumbai-based ICICI Bank, four sources with knowledge of the matter said.

Last month, Washington unveiled 30-day waivers on U.S. sanctions for the purchase of Russian and Iranian oil at sea in an attempt to ease prices that were driven ​up by the U.S.-Israeli war on Iran. Treasury Secretary Scott Bessent on Wednesday said the U.S. would not renew ​the waivers, with the exemption on Iranian oil set to lapse on Sunday.

Difficulties over ⁠arranging payment for such cargoes given longstanding sanctions on Tehran have deterred some would-be buyers of Iranian crude ​under the waiver, traders have said.

Earlier this month, state-run Indian Oil Corp, the country’s largest refiner, bought 2 million ​barrels of Iranian oil onboard the very large crude carrier Jaya in the country’s first purchase of Iranian crude in seven years, Reuters reported, a cargo worth roughly $200 million.

India has also allowed four vessels carrying Iranian oil to berth for privately-run refiner Reliance Industries, sources said last ​week. A vessel, the MT Felicity, has discharged thus far, according to LSEG data and a shipping source.

Both refiners ​are settling the trade through ICICI, which is routing funds in Chinese yuan via its Shanghai branch to seller accounts in yuan. The ‌identity ⁠of the sellers could not be determined.

ICICI, IOC, Reliance and India’s foreign ministry did not respond to emails seeking comment.

Details on how the cargoes are being paid for have not been previously reported.

NOTICE OF READINESS

IOC paid about 95% of the cargo’s value against the supplier’s notice of readiness, which indicates that the loaded tanker had entered Indian waters, two ​of the sources said. One ​of them said this was ⁠an unusual arrangement.

Typically, Indian state-owned refiners settle payments upon delivery or discharge for oil from countries that are sanctioned by Western nations, the two sources said. India has been among the ​top buyers of Russian oil since Moscow’s 2022 invasion of Ukraine resulted in ​widespread Western sanctions on ⁠Russia.

The sources declined to be named as they were not authorised to speak to the media.

Indian refiners have also used China’s currency to settle some of their Russian oil purchases.

IOC does not plan to make further Iranian oil purchases, one ⁠of the ​sources said.

Until the U.S. waiver, India had shunned the purchase of ​Iranian oil since 2019, under pressure from American sanctions.

Chinese independent refiners, known as teapots, have been the main buyers of Iranian oil exports since then.