Iran wary of durability of new oil payment model

Even though New Delhi has reached an agreement to settle its oil payment crisis with Tehran, the latter on Monday sounded sceptical about the efficacy and durability of the just worked out solution in the long-run.

Iranian Deputy Foreign Minister in-charge of economic affairs Syed Amir Mansoor Borghei used the metaphor of the heavy downpours in the city to explain his predicament and said, "Today, there was rain and the traffic was disrupted. Tomorrow the problem may recur".

"It may also be possible tomorrow again some kind of another issues may come up," he told reporters, using an interpreter, on the sidelines of an event in Mumbai when asked specifically if he finds routing payments through a Turkish bank sustainable in the long run.

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Under a payment settlement announced on Sunday, Indian oil importers will open rupee accounts in the New Delhi branch of Union Bank of India, which will route the euro payments to the Turkish state-run bank Turkiye Halk Bankasi (Halkbank) in Istanbul, which in turn will transfer the money to the account of National Iranian Oil Co.

The settlement was reached after repeated threats by Iran to stop oil shipments to India on credit from August, forcing importers like MRPL and Essar to contract crude from Saudi Arabia.

Borghei attributed the new mechanism to the work done by financial experts of both the countries over the past several months.

"The mechanism is the result of the financial experts of the two countries who have arranged and come to a formula which is as of now solving all the issues," he said.

"It may also be possible that tomorrow again some other issues may come up. What is important is that the economic needs of a person or a country definitely plays an important role in solving such issues," he added.