New Delhi/Tehran: Iran said yesterday that an oil payments dispute with India had been resolved by changing the currency of settlement, according to the country's semi-official Fars news agency.
Central bank officials from Iran and India, keen to balance its energy needs with global diplomatic interests, were meeting in Mumbai in an effort to keep their oil trade running.
"By changing the currency for oil transaction between Iran and India the problem was solved," Deputy Oil Minister Ahmad Khaledi was quoted as saying by Fars news agency.
A spokeswoman with the Indian central bank did not have immediate comment.
Indian officials and traders were hopeful of a quick resolution to the row that could disrupt about 13 per cent of its oil imports and leave refiners scrambling for expensive alternative sources of crude.
The Reserve Bank of India (RBI) said a week ago week that oil trade payments to Iran could no longer be settled using a long-standing clearinghouse system run by regional central banks, and Tehran has refused to sell oil outside the old set-up. Last week the RBI extended the move to apply to all current account transactions.
Hopeful
"We are extremely hopeful that this impasse will be resolved shortly as Indian companies every week get crude supplies from Iran," B. Mukherjee, head of finance at state-run Hindustan Petroleum Corp, told Reuters earlier. Other importers of Iranian crude include state-run Indian Oil Corp and Mangalore Refinery and Petrochemicals Ltd and privately-run Essar Oil .
The White House, which wants governments to stop dealing with Iran because of its nuclear programme, has praised the move, which came less than two months after President Barack Obama's trip to India, where he pledged to help boost New Delhi's global role.
UN sanctions on Iran do not cover oil sales.
India and Iran could agree to settle deals in Iran's rial or another currency such as the Japanese yen, Indian Oil Secretary S. Sundareshan suggested on Thursday.
South Korea pays for Iranian crude using the won.
Payments could also be routed through a third-country central or commercial bank.
An economy growing at about 9 per cent a year has made India the world's fourth-largest importer of crude. Iran is its second largest supplier after Saudi Arabia.
Indian oil importers get 90 days credit for payment so they are covered for old transactions, but future shipments would be in jeopardy if the matter had not been resolved.
India buys about 400,000 barrels per day of Iranian crude, sending roughly $12 billion a year to Tehran via the Asian Clearing Union, a system created in the 1970s by central banks in South Asia and Iran to clear trade payments between them.
