India, China Exposed – India to Export Wheat for Oil
The US government has given the banks in Japan and 10 EU countries a six-month retrieve from financial sanctions for processing payments for Iranian crude imports through the Central bank of Iran (CBI). The exemptions were granted because those countries have significantly cut purchases of Iranian oil in the past few months.
The decision leaves China and India, Iran’s top oil customers, exposed to US sanctions. The full sanctions against the CBI goes into effect at the end of this month. Countries purchasing Iranian oil need to process their payment through the CBI. The sanctions against the CBI are designed to significantly cut Iran’s oil exports.
Meanwhile, India’s Economic Times reported today that India is considering exporting wheat to Iran, in essence bartering wheat for oil, so to avoid processing payments through the CBI. In this scheme, India will deposit payments for Iranian crude purchases in rupee bank accounts set up for Iran in New Delhi and Iran in turn use these rupee accounts to pay for wheat and other imports from India. The problem is that the value of Iranian oil exports to India far surpasses that of its imports, even with if the wheat agreement is finalized. India currently has huge stockpiles of grains after bumper harvests.