India has settled a $5 billion dispute over payment for oil imports from Iran, according to reports from the Iranian oil ministry and the Iranian state-backed Mehr news agency.
In order to navigate payment through what has been described by the Carnegie Endowment for Peace as the “swiss cheese” of international sanctions currently levied against Iran, India will make the $5 billion back payment and future payments for crude through a Euro-denominated facility in Turkey’s Halkbank.
While buying Iranian crude remains legal under the sanctions regime, severe financial restrictions have made it difficult to pay Tehran for crude exports.Â
India imports around 400,000 barrels of oil per day from Iran, some 12% of total national daily demand. The Iranian oil ministry had threatened to cancel future exports to India if payment terms were not negotiated.
The deadlock gave Saudi an opportunity to replace Iranian supply to India, with a deal for the sale of three million barrels struck earlier this month to hit Indian refineries later in August.
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