India Oil Firm Cancels Imports from Iran

A cashier checks Indian rupee notes inside a room at a fuel station in Ahmedabad

A cashier checks Indian rupee notes inside a room at a fuel station in Ahmedabad

But he said that it would be "of great importance" to the Japanese oil industry to maintain its "favorable" relationship with Iran as a major supplier.

France and Germany, two European countries which are still part of the 2015 nuclear deal with Iran are working out a payment mechanism that will not include the US dollar in financial transactions with Tehran.

Looking to win waivers, India is reportedly significantly reducing Iranian oil purchases this month and next.

India is yet to take a call on complying with the US sanctions on Iran.

Two industry sources also told Reuters Thursday that India will settle payments for Iranian oil using rupees through local banks starting in November as the sanctions will make it hard to settle trades through European banks. The Trump administration is now in talks with India on issues related to Iranian sanctions. Iranian oil exports have dropped ahead of sanctions as several countries have begun to curtail their purchase from the Middle-East producer.

Work was slowed by the difficulty equipment suppliers had in obtaining financing for the project, a effect of hesitancy among banks about whether the U.S. might still try to sanction the project.

Saudis indicate comfort with higher oil prices
US oil production in August averaged 10.9 million barrels per day, the EIA estimates - up by 120,000 barrels per day in June. Prices hit a two-month high Wednesday as Brent crude - the world's most closely followed gauge - rose above $79 a barrel.

The second source said after the United States announced it would re-impose sanctions in May, Iran has already received payments for some cargoes in rupees.

Chennai Petroleum's reduced demand will further cut India's imports from Iran to about 10 million tons in October, lower than previous estimates reported by Reuters.

USA officials have said Washington would consider waivers for Iranian oil buyers such as India if they promise to cut imports significantly and ultimately bring it down to zero. India has also offered to cut its oil purchase from Iran significantly to secure a waiver from the USA to continue its imports. The EU has promised to protect its business interests against the impact of United States sanctions against Iran.

The official said this time around the entire 100 per cent of Iranian oil import bill can be paid in rupees.

South Korea, in turn, has replaced Iranian crude with imports from Saudi Arabia and Iraq, according to the energy ministry, but it is also in talks with the United States to get a waiver.

In 2010, India's central bank ceased using a Tehran-based regional body, the Asian Clearing Union, to handle transactions with Iran.

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