India, China Exposed – India to Export Wheat
for Oil
The US government has given the banks in Japan
and 10 EU countries a six-month retrieve from financial sanctions for
processing payments for Iranian crude imports through the Central bank of
Iran (CBI). The exemptions were granted because those countries have
significantly cut purchases of Iranian oil in the past few months.
The decision leaves China and India, Iran’s top
oil customers, exposed to US sanctions. The full sanctions against the CBI goes
into effect at the end of this month. Countries purchasing Iranian oil need to
process their payment through the CBI. The sanctions against the CBI are designed to significantly cut Iran’s oil exports.
Meanwhile, India’s Economic Times reported
today that India is considering exporting wheat to Iran, in essence bartering
wheat for oil, so to avoid processing payments through the CBI. In this scheme,
India will deposit payments for Iranian crude purchases in rupee bank accounts
set up for Iran in New Delhi and Iran in turn use these rupee accounts to pay
for wheat and other imports from India. The problem is that the value of
Iranian oil exports to India far surpasses that of its imports, even with if the wheat agreement is finalized. India currently has huge stockpiles
of grains after bumper harvests.
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