India’s Essar Oil has reportedly cleared $500 million of a debt it owed to Iran for previous purchases of crude oil.
The announcement has been made by Reuters citing two sources with direct knowledge of the matter.
Essar, which is the largest buyer of Iran’s oil in India, owed about $3 billion to Iran over purchases that were carried out during the years the country was under a US-engineered regime of sanctions, according to presstv.ir.
The same sanctions had blocked the banking channels to Iran thus making payments for trade transactions to the country impossible.
Some of the sanctions were lifted earlier this year thus opening the banking channels to Iran.
Indian refiners have been accordingly settling oil debts to Iran in euros via State Bank of India and Germany-based bank Europaeisch-Iranische Handelsbank AG (EIH).
The total debt by the refiners to Iran stands at around $6.5 billion.
Iran announced in April that it is ready to increase its oil exports to India from the current volume of 350,000 barrels per day (bpd) now that the sanctions that had previously hampered Iranian oil export plans have been lifted.
Essar has been already increasing its recent purchases of oil from Iran.
Figures show it imported about 187,300 barrels per day (bpd) of oil from Iran last month, an increase of about 4.6 percent from April and an increase of about 50 percent compared with a year ago.
Essar's oil imports from Iran averaged at about 149,500 bpd in the first five months of 2016 compared with 76,000 bpd of a year ago, Reuters reported on 28 June.