The transactions have reportedly been routed through a private bank’s Shanghai office ahead of the expiry of the US waiver.
Indian refiners are making payments for Iranian oil in yuan, after a temporary sanctions-waiver by the US enabled New Delhi to buy crude from the Middle Eastern country, Reuters reported.
The US issued the one-month waiver on March 20, which Washington says will not be extended.
Payment for the Iranian cargoes is a complicated issue due to the US sanctions on Tehran, deterring some prospective buyers of crude from the country.
Indian Oil Corp bought 2 million barrels of Iranian oil in April, the country’s first purchase of Iranian crude in seven years, reportedly worth $200 million.
New Delhi has also allowed four vessels carrying Iranian oil to berth for its largest private refiner, Reliance Industries.
Both trades are being settled through ICICI Bank, a private bank, which is routing funds in Chinese yuan via its Shanghai branch, the news outlet reported.
Indian refiners have previously used yuan to settle some Russian oil purchases.
Traders selling Russian oil to Indian companies prefer payments in yuan over the US dollar since they don’t have to convert the Chinese currency before paying oil producers. The yuan has become a major foreign currency in Russia.
The yuan’s emergence as a global currency would be essential for Beijing to turn into a true “financial powerhouse,” President Xi Jinping has said, amid concerns about the dollar’s status as the world’s reserve currency.
Iranian crude accounted for 11.5% of India’s total imports before it ceased purchases in 2019 after the tightening of US sanctions.
New Delhi is the world’s third-largest importer and consumer of oil and procures 90% of its requirements from abroad.
India emerged as a key market for Russian oil after the Ukraine conflict escalated in 2022. Its purchases of Russian crude more than tripled to $5.8 billion in March, from $1.54 billion in February.
Image credit: Eric Prouzet
