Indian refiners are settling payments for a set of rare Iranian crude shipments in Chinese yuan, moving funds through Mumbai-based ICICI Bank and its Shanghai branch, four sources with direct knowledge of the transactions said.
The purchases were made under a temporary U.S. sanctions waiver that Washington announced last month - a 30-day exemption intended to reduce price pressure created by the U.S.-Israeli conflict with Iran. Treasury Secretary Scott Bessent said on Wednesday the U.S. would not renew the waivers, and the exemption for Iranian oil was due to lapse on Sunday, the sources said.
The mechanics of the trades, according to the sources, involve ICICI routing yuan from its Mumbai operations via its Shanghai branch to seller accounts denominated in yuan. The precise identity of the sellers could not be determined from the information the sources provided. ICICI, the refiners involved and India’s foreign ministry did not respond to emailed requests for comment.
State-run Indian Oil Corp (IOC) acquired 2 million barrels of Iranian crude aboard the very large crude carrier Jaya earlier this month - the country’s first purchase of Iranian oil in seven years, the sources said. That cargo was worth roughly $200 million. Separately, India allowed four vessels carrying Iranian oil to berth for privately run Reliance Industries, the sources added, and one vessel named the MT Felicity has discharged so far, according to LSEG data and a shipping source.
Traders contacted by the sources had said that arranging payment for Iranian cargoes has been a deterrent for some potential buyers under the waiver because of longstanding sanctions on Tehran. The sources said difficulties over payment mechanisms have limited participation by would-be purchasers despite the temporary exemption.
Notably, one of the sources described an atypical settlement step in the case of the IOC purchase. IOC paid about 95% of the cargo’s value on receipt of the supplier’s notice of readiness, which signals that the loaded tanker had entered Indian waters. Two of the sources characterized this as an unusual arrangement; they said Indian state refiners typically settle payments when delivery or discharge is completed for oil originating from countries subject to Western sanctions.
The four sources who provided details declined to be named because they were not authorised to speak publicly. They also confirmed that, prior to the U.S. waiver, India had generally avoided purchasing Iranian crude since 2019 in response to U.S. sanctions pressure. Since those years, Chinese independent refiners - sometimes referred to as teapots - became the primary buyers of Iranian exports.
The sources also noted that Indian refiners have previously used Chinese currency to settle at least some purchases of Russian crude, a practice that has gained traction since Moscow faced wide-ranging Western sanctions after 2022. One of the sources said IOC does not plan to make further Iranian oil purchases.
Details on the exact mechanics of how the cargoes were paid for have not been previously reported, the sources added. The payments and the broader commercial arrangements underline both the logistical and regulatory complexities facing refiners when trading oil from suppliers affected by international sanctions.