India's central bank has said it will not facilitate payments for Iranian crude imports, in another blow to the Islamic Republic's oil business as global pressure on Tehran grows over its nuclear programme. Although United Nations sanctions do not forbid buying Iranian oil, the United States has pressed hard for governments and companies to stop dealing with Tehran. Many oil majors and banks have abandoned their dealings since then.
US President Barack Obama visited India last month and said he supported its bid for a permanent UN Security Council seat. The Reserve Bank of India said in a statement on Thursday Indian oil imports payments to Iran will have to be settled outside the existing Asian Clearing Union (ACU) mechanism, which involves the central banks of India, Bangladesh, Maldives, Myanmar, Iran, Pakistan, Bhutan, Nepal and Sri Lanka.
"It has now been decided that payment for import of oil and gas should be settled in any permitted currency outside the ACU mechanism," the statement said. Indian oil industry sources said the change notified by the RBI could hurt their imports as it would force NIOC and Indian firms to find a common platform - probably a European bank - for settling trade, instead of the central banks.