Central Bank of Iran (CBI) is seeking to establish payment mechanisms with “neighbouring and friendly” countries as well as facilitate barter trade in a bid to offset the possible effects of the US move not to renew oil sanctions waivers to the eight importers of Iranian crude.
The moves are part of a six-point contingency plan, revealed by the CBI on Saturday, that aims to cope with the consequences of a sharp drop in Iranian oil sales. Iranian officials and analysts believe Iran could sell up to 600,000 bpd of its crude after the Washington's move.
“The Central Bank had previously taken necessary measures to counter and neutralise the US economic pressures and taken formation in a bid to control the forex market and inflation,” CBI Governor Abdolnaser Hemmati said on Saturday.
The sixth point on the list of the measures foresees the creation of special financial channels between Iran and “neighbouring and friendly” countries, a reference to the country’s neighbours with which Iran is on good terms such as Iraq, Turkey, Afghanistan, Pakistan, India and China.
CBI has already put in place a payment mechanism with its western neighbour Iraq to repatriate Baghdad’s debts for importing Iranian energy.
Turkey also announced in April that it’s seeking to create a similar structure with Iran to allow the continuation of bilateral trade after the US didn’t extend Anakara’s sanctions waiver to purchase energy from Tehran.
China, another client of Iranian crude, criticised Washington’s move not to renew its exemption from US sanctions on Iranian oil.
Iranian authorities say trade with China is already done in national currencies, avoiding US dollar. However, Bank of Kunlun, the only Chinese lender that cleared Iranian transactions after the US unilateral sanctions in August last year, has put huge restrictions on financial dealings with Iran.
India, the third largest buyer of Iranian energy, is already using its own Special Purpose Vehicle (SPV) to continue trade with Iran.
Watch video: Indian Ambassador to Iran Dharmendra talks about New Delhi SPV (13 March)
Bilateral commercial exchanges with Russia are also being carried out in Russian ruble and Iranian rial, according to the Iranian officials.
Iranian Central Bank and the State Bank of Pakistan signed an agreement in 2016 to skirt US dollars in their trade, however, the deal seems to have been left on paper only.
A group of Pakistani businessmen with commercial interests in trading with Iran, have urged the government of Prime Minister Imran Khan to choose a Karachi-based Chinese bank to handle Iranian financial transactions.
The European SPV with Iran, called Instrument in Support of Trade Exchanges (INSTEX), has been created, its president and board members have been appointed as Iran has appointed its top bankers to run a counterparty company to facilitate Iran-Europe trade. Although both companies have annouced they are ready to start trade exchanges, no transanction has been registered so far.