Iran, India Drop Dollar in Oil Trade

India will reportedly pay for Iranian oil in rupees, as the two countries seek to bypass the US economic pressure on Tehran, sources said.

Under the deal, the payments for oil will be made through India’s state-run UCO Bank, which has no US exposure. The countries are also discussing the barter-like system to avoid US sanctions, Sputnik reported.

Iranian Foreign Minister Mohammad Javad Zarif is on a visit to India this week, where he met with his Indian counterpart Sushma Swaraj.

"During the talks, the two sides also exchanged views on a further expansion of ties in banking, energy, trade, insurance, shipping, use of national currencies, Chabahar projects and Chabahar-Zahedan railway," Zarif said in a statement.

India’s Swaraj said the country would ignore the US trade sanctions against Iran.

“India will comply with UN sanctions and not any country-specific sanctions,” Swaraj said.

Iran is India's third-largest oil supplier. India bought a record 27.2 million tons of oil from Tehran during the last financial year, which ended in March 2018. It represents a 114% increase on the previous year.

India was among a select group of countries, which maintained oil purchases from Iran when the country came under intensified western sanctions in 2011.

Indian refiners have recently expressed willingness to maintain oil imports from Iran.

The importers say they will adhere to their term supply contract obligations with the Persian Gulf producer, undeterred by Washington's efforts to restrain Tehran's oil sales.

State-run Bharat Petroleum Corporation Limited is set to receive 130,000 tons of its regular monthly term crude oil cargo from the National Iranian Oil Company in the coming days, Platts reported on Tuesday.

According to the oil pricing agency, BPCL currently holds a term contract with NIOC to buy 1 million tons for its Kochi refinery over April 2018-March 2019.

India's flagship state-run refiner Indian Oil Corporation also holds a term contract with Iran to receive 180,000 barrels per day in the current fiscal year ending March 2019.