Looks like the old South African days of Gold for Oil are alive and well again.
Original source
By Benoit Faucon
LONDON (Dow Jones) China is using its currency, the yuan, and gold to pay for some of its imports of Iranian crude oil, according to Iran trade professionals.
The news underscores how the Islamic Republic is able to alleviate the effect of mounting sanctions, which in turn could ease global oil supply concerns and push oil prices further down.
One Iran trade professional said last week that Chinese oil companies have for many months been using the yuan to pay for some Iranian oil, after many banks refused to handle payments in dollars.
"In return, Iran is using the currency to pay for infrastructure such as roads," the person told Dow Jones Newswires.
According to a person in the shipping industry, China now represents one-third of Iran's oil sales.
European refiners have cut purchases of the Islamic Republic's crude ahead of a planned embargo coming into force this summer; Asian buyers have also reduced imports to avoid being banned from the U.S. financial system.
Iran is also using a local currency, the rupee, to sell some of its crude to India. However, such a payment mechanism tends to be unfavorable for Iran, locking Tehran into captive trade relations with its oil buyers. In addition, there is only so much the Islamic Republic can buy in goods from China and India.
So in addition to the yuan, Iran has also agreed to be paid in gold for some of its oil, the trade professionals say. In one recent case, two Iranian oil tankers heading for China were bartered at sea with their equivalent in the precious metal, one Iran trade professional said.
By Benoit Faucon
LONDON (Dow Jones) China is using its currency, the yuan, and gold to pay for some of its imports of Iranian crude oil, according to Iran trade professionals.
The news underscores how the Islamic Republic is able to alleviate the effect of mounting sanctions, which in turn could ease global oil supply concerns and push oil prices further down.
One Iran trade professional said last week that Chinese oil companies have for many months been using the yuan to pay for some Iranian oil, after many banks refused to handle payments in dollars.
"In return, Iran is using the currency to pay for infrastructure such as roads," the person told Dow Jones Newswires.
According to a person in the shipping industry, China now represents one-third of Iran's oil sales.
European refiners have cut purchases of the Islamic Republic's crude ahead of a planned embargo coming into force this summer; Asian buyers have also reduced imports to avoid being banned from the U.S. financial system.
Iran is also using a local currency, the rupee, to sell some of its crude to India. However, such a payment mechanism tends to be unfavorable for Iran, locking Tehran into captive trade relations with its oil buyers. In addition, there is only so much the Islamic Republic can buy in goods from China and India.
So in addition to the yuan, Iran has also agreed to be paid in gold for some of its oil, the trade professionals say. In one recent case, two Iranian oil tankers heading for China were bartered at sea with their equivalent in the precious metal, one Iran trade professional said.
No comments:
Post a Comment