UPI -- A new mechanism to settle trade issues between Iran and India means good things for a hang up on oil payments, an official close to the talks said.
New Delhi in August paid off 40 percent of its debt to Iran for oil transferred on credit during the first part of the year. India imported about 12 million barrels of oil per month from Iran on credit, racking up roughly $5 billion in debt to Tehran.
Indian refiners said they were opening an account in the Union Bank of India to transfer payments based on the euro to Turkey's state-owned Halkbank in Istanbul.
India was receiving Iranian crude oil shipments on credit because of payment obstacles brought on by economic sanctions placed on Tehran.
Both sides said they agreed on a mechanism to resolve the trade issues. The mechanism means New Delhi would pay exporters on a net basis leading to billions of dollars being deducted from the country's oil debt to Iran, an official familiar with the talks told The Times of India.
Iran is one of the largest suppliers of crude oil to India. India in 2010 imported 135 million barrels of oil from Iran, down from 156 million barrels the previous year.
