US says clients to settle oil sales with Iran through escrow accounts

The United States says countries that have received waivers to continue purchases of oil from Iran will have to set up escrow accounts from which payments to Tehran would be settled.

Senior US official Brian Hook was quoted by media as saying that settlements with Iran would be carried out through “credits” and not hard currency.

Hook added that the importing nations would be required to make sure that Iran would spend the money from oil sales on humanitarian purchases.

He also stressed that Washington would closely monitor the functions of accounts allocated for Iran oil purchase settlements.

“Any time Iran sells oil, that money goes into an escrow account in the importing nation’s bank, and Iran has to spend down that credit,” Hook was quoted as saying by the Times of India.

US President Donald Trump said on Friday that his administration would on November 5 restore all Iran sanctions that had been lifted in 2015 after a nuclear deal was signed between the country and the five permanent members of the Security Council – the US, Britain, France, Russia and China – as well as Germany.

This could jeopardize the nuclear deal – technically known as the Joint Comprehensive Plan of Action (JCPOA) – which emphasized that the sanctions would only return if Iran failed to live up to its commitments.

The International Atomic Energy Agency (IAEA) that had been tasked under the JCPOA to check whether Iran was complying with the terms of the nuclear deal in all of its subsequent assessments after 2015 said it had not found any instance of Iranian non-compliance.

Trump’s attempts to unilaterally undermine the JCPOA mobilized Europe to save the deal. The European Union has announced that it is working on a solution that would keep trading with Iran alive even after the US restores sanctions that include mechanisms to chock off channels for financial transactions with Iran.

However, EU’s solution appears to have run into several complications which may mean the entire process could not become operational before 2019, the Times of India added in its report.

Many European countries, the report added, are wary of getting involved in EU’s solution and thus attracting the wrath of the US.

That is one reason why India decided not to go with the European alternative at present, the daily added.