After threats from Iran to cut off crude oil supplies to India from August 1, a high-level team of officials from Tehran is visiting New Delhi to finalise an appropriate payment mechanism that will ensure timely payments to the oil-rich nation from buyers in India.
India is the second-largest buyer of crude oil from Iran after China and imports nearly 400,000 barrels of oil per day — about 12% of India’s total oil demand of 3.5 million barrels per day.The Iranian team, expected sometime next week, will hold discussions with Indian officials from the ministries of finance and petroleum, besides the Reserve Bank of India (RBI), petroleum ministry sources said.
Under the mechanism proposed by the central bank, payments for Iranian oil will now be routed in euros and dirhams through Turkey and the UAE.
Also under discussion is the opening of bank accounts in rupees, besides euros and dirhams. Payments made in rupees could be utilised by Tehran to settle payments for items imported from India, sources said.
“All proposals will be discussed during the visit of the Iranian team,” a senior petroleum ministry official said.
Meanwhile, petroleum minister S Jaipal Reddy on Friday said that he expects the first tranche of payments to reach via Turkey. He, however, said it was difficult “to fix time frames” when asked about when an alternate payment mechanism would be finalised to pay the $5- billion outstanding to Iran.