India, Iran may resolve oil payments crisis soon

With the six-month long oil payments crisis involving India and Iran turning ugly with Tehran threatening to shut off crude oil supplies, both countries signalled they were perhaps close to securing a viable, long-term solution.

Reports quoted an unnamed senior Government of India functionary as saying both sides were working on a ''mechanism'' for making payments and that they were close to a solution. Banks in a number of countries had been identified for routing oil payments to Iran.

The same source revealed that the names of these entities could not be divulged as they were liable to come under pressure from Western countries, particularly the United States, much the same as Germany did, when it was allowing its banking channels to be used as a payment route.

He did hint that the payments were likely to be made in euro.

Sources say very likely a multi-pronged strategy would be adopted as both sides are considering a variety of approaches and the final solution could be a combination of those, including making payments in different currencies and a cargo-by-cargo payment.

Earlier, on 27 June, Iran's oil producer and exporter, the National Iranian Oil Co (NIOC), had written to Indian refiners like Mangalore Refinery and Petrochemicals Ltd (MRPL) and Essar Oil, principal buyers of Iranian crude, asking for a mechanism to be put in place to clear outstanding dues. It's estimated that by now Indian refiners owe as much as $6 billion for supplies received over the last six months.