According to a new and yet unconfirmed report, India bought oil from Iran using gold. India certainly has the gold resources to fund the oil, while Iran is under pressure by the West, due the continuation of its nuclear program.
There were reports that officials have been floating this idea for
some time, and now, as the EU finally decided upon an oil embargo on
Iran, more details became available, yet still pend confirmation.
Oil is
priced in US dollars, and bypassing the greenback posed challenges for
both parties. Two banks are reportedly involved in this deal: India’s
state owned UCO Bank and Turkey’s state owned Halkbank.
Both banks don’t have any business with the US and therefore are less
vulnerable to sanctions. According to the report, an Indian delegation
has spent time in Tehran and finalized the details of the transactions.
The annual capacity of trade between these two countries is 12
billion dollars. With gold trading at around $1668, that is around 7.2
million ounces of gold.
The step joins Russia and Iran’s announcement to begin trading in their own domestic currencies rather than use the US dollar – a reserve currency.
These details about the gold for oil deal come on the day that EU
officials announce an oil embargo on Iran starting on July 1st.
The time it took the EU to reach the decision, and the late
implementation date make it very easy for Iran to enlarge exports to oil
hungry and fast growing Asian countries.
The use of gold for buying the No. 1 commodity, will likely have
positive implications for the precious metal, if this report is
confirmed and especially if the use of gold widens to China – the
world’s No. 2 economy.
Sumber: Forexcrunch
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