Indian Refiners to Finish Paying Iran $1.65 Billion for Oil This Month

NEW DELHI—Indian refiners will finish paying Iran $1.65 billion by the end of this month as payment for crude-oil imports, two people with knowledge of the matter said Tuesday.

"Indian refiners have paid two installments of $550 million each. A third installment of an equal amount will be paid later this month," said one of the people, who asked not to be named.

The second installment was paid Tuesday, he said.

Since February last year, after the U.S. sanctions blocked payments to Iran, India has been paying 45% of its Iran oil dues in rupees through state-owned UCO Bank Ltd. 532505.BY -3.77%

For the remaining amount, which came to around $4 billion in May, India had to create a payment mechanism. Both India and Iran now have mechanisms in place to process the accumulated dues.

To transfer the money to Iran, Indian refiners paid what they owed for Iranian oil to UCO Bank, which transferred the money to the Reserve Bank of India, which sent dollars to the central bank of the United Arab Emirates which then paid Iran in dirhams, one of the people said.

An estimated $100 billion in payments due for Iranian oil imports has been locked up thanks to U.S. sanctions put in place to pressure Iran to give up its nuclear ambitions.

Under a deal with the U.S. and five other world powers in November, Iran was granted access to $4.2 billion in past oil revenues from India and other countries.

Write to Saurabh Chaturvedi at [email protected]