Iran accepts yuan for crude oil

Tehran is spending the currency on goods and services imported from China, the Financial Times reported on Monday. Most of the oil that goes from Iran to China is handled by the Unipec trading arm of Sinopec, China's second-largest oil company, and through another trading company called Zhuhai Zhenrong, the oil industry executives said. The trade is worth as much as $20bn-$30bn annually according to industry estimates, but a share of it is in barter form. Zhuhai Zhenrong, for example, pays Iran for its oil by providing services such as drilling, these people add. "The global financial crisis accelerated the shift from the west to the east," said the chief executive of one bank in Dubai. "Such measures [as the US sanctions against Iran] will now enhance the acceptability of the renminbi as a transaction currency." The US applied sanctions on Zhuhai Zhenrong earlier this year for allegedly brokering gasoline shipments to Iran - which lacks refining capacity - a charge that the company has denied. The renminbi purchases began some months ago. Initially the non-barter portion of the transactions were settled in Beijing through renminbi accounts but now domestic banks such as Bank of China have stopped dealing with Iran, the oil executives and bankers said. Instead, much of the money is transferred to Tehran through Russian banks. Iran sells 21 per cent of its crude oil exports to China, making Beijing crucial to Tehran's ability to withstand unilateral US sanctions.