The Economic Times of India quoted officials as saying that the problem would be a result of the sanctions that the administration of US President Donald Trump would impose against Iran.
It added that State Bank of India (SBI), the country’s largest lender, had communicated to oil refiners that the euro payment route would be not available after November 3, 2018.
The daily further highlighted remarks by R Ramachandran, the finance director of India Oil Corp (IOC) that the country’s refiners could find alternative suppliers from the Middle East, the US and Russia to replace Iran should payment problems with the Islamic Republic prevail.
“Once the current payment channel is blocked, supplier (Iran) has to decide if it wants to trade with us in rupee or sell oil on credit in anticipation of channels re-opening in future,” Ramachandran was quoted as saying.
India pays its third largest oil supplier in euros using European banking channels and imports can continue on alternate modes should it be blocked, he said.
Currently, oil firms first transfer funds to SBI, which in turn uses Germany-based Europaeisch-Iranische Handelsbank AG (EIH) to pay in euros to Iran, the Economic Times of India added.
In May, Trump announced that he would pull America out of a 2015 nuclear agreement with Iran and re-impose the sanctions that the deal had envisaged to be lifted.
He has already emphasized that the sanctions which would be imposed on Iran would be “at the highest level”.
The sanctions would include a universal ban on Iran over buying or acquiring US dollars as well as restrictions over purchases of crude oil from the country and investing in its oil sector projects.
Iran is India’s third-largest oil supplier behind Iraq and Saudi Arabia. It supplied 18.4 million tonnes of crude oil during April 2017 and January 2018 (first 10 months of 2017-18 fiscal), according to the Economic Times of India.