Iran accepts Chinese yuan in exchange for oil
ABU DHABI, May 8 — Iran is accepting yuan for some of the approximately US$20 billion (RM61 billion) worth of crude the OPEC member supplies to its main client, China, annually, an Iranian diplomat said today, as the two countries try to maintain trade ties despite Western sanctions.
US sanctions against Iran have made paying for its crude with hard currency difficult for top oil customers including China and India, forcing them to look for alternatives.
The US dollar and euros are the two main currencies used in the global oil trade.
But tougher Western measures aimed at pressuring Iran to halt its nuclear programme have forced importers of Iranian oil to pay in the Korean won and the Japanese yen.
The Financial Times yesterday reported that China for months has been transferring renminbi to Tehran through Russian banks to pay for Iranian crude. OPEC’s second largest oil producer was using the currency to spend on goods and services imported from China.
Initially, the non-barter portions of the transactions were settled in Beijing through renminbi accounts but, as a result of US pressure, domestic banks such as Bank of China had stopped dealing with Iran, the newspaper said, citing unidentified industry executives.
“Yes, that is correct,” Mohammed Reza Fayyaz, the Iranian ambassador to the United Arab Emirates, told Reuters when asked to comment on the report.
It is unclear how much of Iran’s oil China is paying for with its own currency. China’s two major Iranian oil buyers, Sinopec Corp and Zhuhai Zhenrong Corp, have been paying mostly in euros for the roughly 520,000 barrels per day of supplies they receive.
Chinese companies started paying in euros for their Iranian crude in 2006. The idea of settling some of the oil trade in the Chinese currency was first floated in 2010. — Reuters