Indian Refiners Use Yuan Route Via ICICI Bank For Iran Oil Payments

Indian refiners have settled payments for select Iranian oil cargoes in Chinese yuan through ICICI Bank during a temporary U.S. sanctions waiver period, according to Reuters.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

The transactions relate to purchases made under a 30-day waiver announced by the United States in March, which allowed limited trade in Iranian and Russian oil to ease supply pressures. Reuters reported that the waiver is set to expire on Sunday and will not be extended, as confirmed by U.S. Treasury Secretary Scott Bessent.

Payment Mechanism Through ICICI Bank

According to Reuters, refiners routed payments via ICICI Bank’s Shanghai branch, transferring funds in yuan to seller accounts denominated in the same currency. The identities of the sellers were not disclosed.

Both state-run Indian Oil Corporation and private-sector Reliance Industries used this mechanism for their transactions. The companies, along with ICICI Bank and the Ministry of External Affairs, did not respond to Reuters queries.

First Iranian Oil Purchase In Seven Years

Earlier in April, Indian Oil Corporation purchased 2 million barrels of Iranian crude carried by the very large crude carrier Jaya. Reuters reported the cargo was valued at about $200 million, marking India’s first Iranian oil purchase since 2019.

Separately, India permitted four vessels carrying Iranian oil to dock for Reliance Industries. One of these vessels, MT Felicity, has already discharged its cargo, according to Reuters, citing shipping data.

Unusual Payment Structure

Reuters noted that the Indian Oil Corporation had made 95% payment after the supplier was notified of its readiness, which is indicative of the fact that the vessel had arrived at Indian waters. This stands in contrast to the general practice of making payments on delivery or after discharge, particularly with oil produced in sanctioned countries.

Scope of Transaction

The country had stopped importing oil from Iran after sanctions were imposed by the U.S. in 2019. The recent purchases were enabled only under the temporary waiver. Reuters reported that Indian refiners have previously used the yuan to settle some Russian oil trades as well.

One source told Reuters that Indian Oil Corporation does not plan additional Iranian oil purchases after the current cargo.

With the waiver nearing its end and no extension announced, the use of alternative payment channels such as yuan settlement through overseas banking routes has remained limited to these specific transactions during the exemption window.