Forums > Main > Economics > India to pay gold instead of dollars for Iranian oil

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Old Jan 25th, 2012, 02:59 PM   #1
Join Date: Oct 2010
Location: USA
Posts: 772
January 25, 2012

India is the first buyer of Iranian oil to agree to pay for its purchases in gold instead of the US dollar, DEBKAfile’s intelligence and Iranian sources report exclusively. Those sources expect China to follow suit. India and China take about one million barrels per day, or 40 percent of Iran’s total exports of 2.5 million bpd. Both are superpowers in terms of gold assets.

By trading in gold, New Delhi and Beijing enable Tehran to bypass the upcoming freeze on its central bank’s assets and the oil embargo which the European Union’s foreign ministers agreed to impose Monday, Jan. 23. The EU currently buys around 20 percent of Iran’s oil exports.

The vast sums involved in these transactions are expected, furthermore, to boost the price of gold and depress the value of the dollar on world markets.

Iran’s second largest customer after China, India purchases around $12 billion a year’s worth of Iranian crude, or about 12 percent of its consumption. Delhi is to execute its transactions, according to our sources, through two state-owned banks: the Calcutta-based UCO Bank, whose board of directors is made up of Indian government and Reserve Bank of India representatives; and Halk Bankasi (Peoples Bank), Turkey’s seventh largest bank which is owned by the government.

An Indian delegation visited Tehran last week to discuss payment options in view of the new sanctions. The two sides were reported to have agreed that payment for the oil purchased would be partly in yen and partly in rupees. The switch to gold was kept dark.

India thus joins China in opting out of the US-led European sanctions against Iran’s international oil and financial business. Turkey announced publicly last week that it would not adhere to any sanctions against Iran’s nuclear program unless they were imposed by the United Nations Security Council.

The EU decision of Monday banned the signing of new oil contracts with Iran at once, while phasing out existing transactions by July 1, 2012, when the European embargo, like the measure enforced by the United States, becomes total. The European foreign ministers also approved a freeze on the assets of the Central Bank of Iran which handles all the country’s oil transactions.

However, the damage those sanctions cause the Iranian economy will be substantially cushioned by the oil deals to be channeled through Turkish and Indian state banks. China for its part has declared its opposition to sanctions against Iran.

DEBKAfile’s intelligence sources disclose that Tehran has set up alternative financial mechanisms with China and Russia for getting paid for its oil in currencies other than US dollars. Both Beijing and Moscow are keeping the workings of those mechanisms top secret.
Old Jan 26th, 2012, 08:36 AM   #2
Join Date: Jan 2009
Location: Miami
Posts: 1,051
I hope this is not true.

Everyone who threatens to use gold ends up under a rain of US missiles.
Old Jan 26th, 2012, 08:59 AM   #3
Join Date: Dec 2005
Posts: 2,239
Quote from jueco2005:

I hope this is not true.

Everyone who threatens to use gold ends up under a rain of US missiles.
Yeah, I was thinking the same thing. Saddam Hussein and Gaddafi sure paid for messin' with USD.

Speaking of such, here's another unintended consequence of our overseas adventurism:
Old Jan 26th, 2012, 09:06 AM   #4
Spike Trader
Join Date: Nov 2004
Posts: 2,806
Quote from jueco2005:

I hope this is not true.

Everyone who threatens to use gold ends up under a rain of US missiles.
They already doing it, China is also contemplating doing the same.
Old Jan 26th, 2012, 02:09 PM   #5
Join Date: Sep 2011
Location: NYC
Posts: 49
Well we already know that Iran produces a little over 5% of the total world production in crude oil every year. If China considers exchanging gold for crude oil this will not be good news for the Western countries, since China is Iran's biggest purchaser in oil. This will be interesting news to follow to see what's China's next move.
Old Jan 28th, 2012, 02:13 PM   #6
Join Date: Jun 2005
Posts: 7,509
Gold & oil contracts are still priced in US dollars. India is going to screw themselves on price when gold goes to $2,500 and oil stays around $100.
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