Indian refiners have been using Chinese yuan routed through ICICI Bank to pay for rare cargoes of Iranian crude bought under a short-lived U.S. sanctions waiver, according to four people with direct knowledge of the transactions. The arrangement involves ICICI channeling funds in yuan from its Mumbai operations through its Shanghai branch to seller accounts denominated in Chinese currency.
Washington issued 30-day waivers last month that allowed purchases of Russian and Iranian oil at sea, a measure intended to help restrain energy prices that rose amid the U.S.-Israeli war on Iran. Treasury Secretary Scott Bessent has since said the waivers will not be renewed, and the exemption for Iranian cargoes is scheduled to expire on Sunday.
What was purchased
State-run Indian Oil Corp (IOC) acquired about 2 million barrels of Iranian crude carried aboard the very large crude carrier Jaya earlier this month, the country’s first import of Iranian oil in seven years. Sources estimate the cargo’s value at approximately $200 million. Separately, India has allowed four vessels carrying Iranian crude to berth for privately held Reliance Industries, and LSEG data along with a shipping source indicate the vessel MT Felicity has discharged.
Details on the mechanics of these payments have not previously been reported. The identities of the sellers receiving yuan payments through ICICI’s Shanghai branch could not be determined from available information. ICICI, IOC, Reliance and India’s foreign ministry did not reply to emailed requests for comment.
Payment timing and practices
One source said IOC paid roughly 95% of the cargo’s value upon presentation of the supplier’s notice of readiness - a document indicating the loaded tanker had entered Indian waters. The same source described that timing as atypical. Two sources noted that Indian state-owned refiners generally settle payments upon delivery or upon discharge when dealing with cargoes from countries subject to Western sanctions.
Traders have said that longstanding sanctions on Iran complicate arranging payments for cargoes, deterring some potential buyers even under the temporary waiver. India has been a major purchaser of Russian crude since Moscow’s 2022 invasion of Ukraine prompted broad Western sanctions on Russia, and some Indian refiners have used Chinese currency to settle at least some of their Russian oil purchases.
Outlook and confirmed intents
One source indicated IOC does not plan to make additional purchases of Iranian oil. The sources who described the transactions requested anonymity because they were not authorised to speak publicly.
The short-term waivers had permitted at-sea purchases of Iranian and Russian oil in an effort to moderate the recent spike in global crude prices. With the U.S. Treasury saying it will not extend the waivers and the Iranian exemption set to lapse on Sunday, the temporary window for these transactions is closing.
Reporting on the payment arrangements was informed by shipping data and conversations with market and shipping sources. Specific seller identities and additional contractual terms were not available to the reporters.