Indian refiners are ready to start transferring cash owed for Iranian oil as early as next week following a landmark deal to curb Iran's nuclear programme that allows importers to shift billions of dollars back to Iran.
Iran and six world powers reached a breakthrough agreement early on Sunday to curb Tehran's nuclear programme in exchange for limited sanctions relief, in a first step towards resolving a dangerous decade-old standoff.
World powers agreed to ease some of the sanctions they had imposed to force Iran to halt its nuclear programme. The measures have slashed the OPEC member's exports by more than half and cost it as much as $80 billion in lost oil sales since the beginning of 2012, the White House estimates.
Since February, sanctions have prevented Iran from repatriating cash earned from the oil it has been able to export, crippling its economy by choking off its biggest revenue stream.
The new agreement would allow Iran to receive about $4.2 billion in oil money from accounts held abroad if it fulfils commitments under the deal over the next six months. Iran's biggest oil buyers are China, India, South Korea and Japan.
India is Iran's second-largest buyer and now owes Tehran about $5.3 billion for oil imports, according to government and refining sources.
India's refiners in mid-October received a request by the National Iranian Oil Company (NIOC) to settle some of those dues in euros via Turkey's state-run bank Halkbank as soon as possible. The refiners had used that payment route until February, when it was blocked by sanctions.
The request came some time before the nuclear deal, puzzling refiners as to why the payment channel could again be used. They have yet to start payments, but will do if the payment route is cleared under the nuclear deal.
"Next week, if it is possible, we will start making our payments," said P.P. Upadhya, managing director of Mangalore Refinery and Petrochemicals Ltd, one of Indian buyers of Iranian crude.
A government official also said that payments would be expedited once the payment mechanism via Turkey opens up.
"If that Halkbank route opens up ... rather than pushing this to a later date perhaps this money will go to the Iranians sooner rather than later," said the official with direct knowledge of the matter.
The United States had in February asked Iran's oil buyers to stop transferring payments to Tehran, and instead keep the money in bank accounts in the