Iran may suspend oil exports to India: Ministry official

Oil&Gas Materials 19 July 2011 13:54 (UTC +04:00)

Azerbaijan , Baku, July 19 /Trend/

Iran is considering suspending oil export permits in August to Indian refineries if the oil payment dispute remains unsolved, Iranian daily Fars News Agency reported quoting an anonymous official in the Oil Ministry as saying.

"The oil export permit for August has not yet been issued by the Oil Ministry. Thus halting oil exports to India is possible if the oil payment problem is not resolved", he said.

Iran has signed a one-year contract to export oil to India. The lack of a permit would mean halting the contract. Indian refineries should seek their daily supply with other countries, he added.

India's debt on Iran's oil payment is currently $5 billion and Iran has been eager to solve the problem of transferring payment as soon as possible, the Governor of the Central Bank of Iran Mahmoud Bahmani said earlier.

Despite India's debt, Iran continues to export 400,000 barrels of oil daily (worth one billion dollars per month) to India.

Tension between the two countries for oil payments began on December 23 when India's Central Bank (Reserve Bank of India) placed restrictions on transactions with Iran through the Clearing House System, the Asian Clearing Union, which Washington believes is used by Tehran to bypass international sanctions.

India has agreed to stop paying for its Iranian oil imports via Germany since Germany's Chancellor Angela Merkel intervened by instructing Germany's central bank Deutsche Bundesbank to stop clearing payments from India to the bank (known as EIH), which is under U.S. but not EU sanctions.

Iran is the second-largest crude oil supplier to India after Saudi Arabia and accounts for about 14 percent of the country's oil import bill.