which makes it the first country to drop the US dollar for purchasing the Iranian oil. China, another buyer of Iranian oil, may follow Delhi's lead.Delhis move is seen as surprising, as earlier India and Iran said they would switch to yen and rupees.
US President Barack Obama signed into law, on December 31, 2011, new sanctions which seek to penalize other countries for importing Iran's oil or doing transaction with Islamic Republic's Central Bank.
Foreign ministers of the European Union also imposed sanctions on Iran's oil imports over the country's peaceful nuclear program during their Monday meeting in Brussels.
The sanctions involve an immediate ban on all new oil contracts with Iran and a freeze on the assets of the country's Central Bank within the EU.
But, India joined China in opting out of the US-led European sanctions against Iran's international oil and financial business. So, they need to switch from the dollar in bilateral trade. And, this means they have to establish a reliable way of paying for crude, independently of the parts of the global financial system controlled by New York and London.
India and China take about one million barrels per day, or 40 percent of Irans total exports of 2.5 million bpd. Both of them have huge reserves of gold.
By trading in gold, New Delhi and Beijing enable Tehran to bypass the upcoming freeze on its central banks assets and the oil embargo which the European Unions foreign ministers agreed to impose Monday, Jan. 23.
Experts believe that the vast sums involved in these transactions are expected, furthermore, to boost the price of gold and depress the value of the dollar on world markets.
Delhi is to execute its transactions, the report said, through two state-owned banks: the Calcutta-based UCO Bank, whose board of directors is made up of the Indian government, the Reserve Bank of India representatives, and Halk Bankasi (Peoples Bank) -- Turkey's seventh largest bank which is owned by the government.
German political analyst Christoph R. Horstel told RT that amid the economic crisis the embargo on Iranian oil imports could backfire on the EU, while Iranwill do quite well even under the embargo.
Sources: Russia Today, Press TV,IINS,Prison Planet
