Indian refiners have reportedly used Chinese yuan routed through ICICI Bank’s Shanghai branch to settle payments for rare cargoes of Iranian oil purchased under a temporary U.S. sanctions waiver, marking India’s first Iranian crude imports in seven years.
Earlier this month, Indian Oil Corporation (IOC) bought 2 million barrels of Iranian crude worth about $200 million, while Reliance Industries also received shipments. These purchases were made possible after Washington granted a 30-day waiver on sanctions for Russian and Iranian oil at sea, aimed at easing global prices impacted by the ongoing U.S.-Israeli conflict with Iran. However, the waiver is set to expire soon, and the U.S. Treasury has confirmed it will not be renewed.
The payment mechanism is unusual: refiners settled trades through ICICI Bank in Mumbai, which routed funds in yuan via its Shanghai branch to seller accounts. Sources revealed that IOC paid about 95% of the cargo’s value upon the supplier’s notice of readiness, a departure from the typical practice of settling after delivery or discharge. This highlights the complexities of trading with sanctioned nations, where conventional dollar transactions are restricted.
India had stopped importing Iranian oil in 2019 under U.S. pressure, making this purchase significant. While Chinese refiners have been the main buyers of Iranian crude since then, India’s temporary return underscores its need to diversify energy sources amid global supply disruptions. Despite this, IOC reportedly does not plan further Iranian purchases once the waiver lapses.
This development also reflects India’s broader strategy of using alternative currencies like the yuan to bypass Western sanctions, a practice already adopted for some Russian oil imports. It signals a shift in global energy trade dynamics, where reliance on the U.S. dollar is being challenged by geopolitical realities.