Bank Stops Indian Tanker Payment Due to Iran Sanctions

The Royal Bank of Scotland (RBS) has stopped payments to a Greek ship owner after it transported Iranian oil for an Indian shipping company. This follows strictly in line with the newly-imposed Western sanctions aimed at decreasing Iranian crude exports.

Shipping insiders claim that India's Great Eastern Shipping Co Ltd has not been able to pay Greek firm Eurotankers, which holds an account with RBS, for using one of its supertankers to ship Iranian crude because the UK-based bank would not clear the payment due to the financial sanctions.

The transaction was considered a new contract because it was made in the spot freight market. The bank’s actions add increasing difficulty to India and other Asian oil buyers as they attempt to maintain their Iranian crude imports within the EU sanctions.

The Indian shipping company hired the tanker, the Remi, at the end of January to deliver 93,000 tons of Iran Heavy crude to Mangalore Refinery and Petrochemicals Ltd., according to Reuters. The cargo was delivered to Mangalore port on February 7. A Eurotankers official confirmed payment from Great Eastern was held up and the issue was now in court.

Iran is India's second-biggest supplier of oil after Saudi Arabia, with about $11 billion in annual shipments, meeting about 12 percent of India's crude import needs. The number of maritime firms willing to transport Iranian crude has already declined significantly since the European Union announced it would proceed with the oil embargo, leaving Asian oil buyers to rely more on Iranian-owned tankers. Insurance problems for shipments have also forced at least one company, Shipping Corp of India, to cancel an Iranian crude delivery last month.

India publicly maintains it will not seek a waiver to U.S. sanctions, and that it sees no need to reduce oil imports from Iran because that is not required under United Nations sanctions. The government, however, has privately asked refiners to cut Iranian imports by at least 15 percent and could still be considered for a waiver from the sanctions.

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