Tuesday, April 24th 12:37 PM IST

Iran insists on gold payment for oil

# Iran gold  # India oil  # China  # gold for oil  

Observers said Iran is insisting on gold payments from India and China as it allowed other means of payment only on a temporary basis to prevent countries from stopping their purchases of Iranian petroleum altogether.

LONDON(BullionStreet) : Rumours are spreading fast on China and India's gold for oil trade with Iran despite the fact that the two Asian giants are already using their local currencies and other consumer goods for oil payment.

Together the two nations account for over $30 billion in annual oil purchases from Iran, which would be a significant amount of gold replacing the dollar in trade.

Observers said Iran is insisting on gold payments from India and China as it allowed other means of payment only on a temporary basis to prevent countries from stopping their purchases of Iranian petroleum altogether.

India and China have already increased the amount of oil imports from Saudi Arabia and other Persian Gulf states.

India has reportedly agreed to pay Tehran in gold for the oil it buys, in a move aimed at avoiding US sanctions that target countries who trade with Iran. China, the number one buyer of Iranian oil, may follow India's lead.

Observers said any gold payment to Iran not only accelerate the decline of the dollar and its role as world reserve currency but would also help boost the price of gold and further legitimize the movement to return to a gold standard.

The move comes as US and European Union sanctions against Iran have made it difficult for buyers to make dollar payments to Iranian banks.

Mahmoud Bahmani, the governor of Iran's central bank, is reported to have said that the country would accept payment in gold "without any reservation".

Meanwhile reports are alos coming in as Iran is seeking to close grain purchases using gold and oil as payment, and has paid in yen for a large volume of wheat in its first deal since western sanctions against Tehran started choking imports of food staples.

The sanctions have drastically cut its ability to obtain euro and dollar denominated financing, forcing Tehran to find alternative ways to pay for its imports, analysts said

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