NEW DELHI: With US sanctions on Iran set to be back in full force, the country’s largest lender State Bank of India (SBI) has informed oil companies like Indian Oil Corporation (IOCL) and Bharat Petroleum Corporation (BPCL) that they will not be able to use European banks to buy Iranian oil after November 3.
Currently, oil firms first transfer funds to SBI, which in turn uses Germany-based Europaeisch-Iranische Handelsbank AG to pay in euros to Iran. The communication to oil refiners does not come as a surprise since US President Donald Trump had last month pulled out of a landmark nuclear deal and said sanctions will be re-imposed on Iran within 180 days.
However, this does not mean Indian refiners will be faced with an insurmountable shortfall. Company officials said that alternate crude oil sources in the Middle East, US and Russia could easily be tapped should Iranian supplies dry up due to payment problems. As far as buying Iranian oil is concerned, it will depend on what Iranian suppliers decide post-November 3, with experts saying that they might have to sell oil to India for rupees or even on credit.