London, 23 July (Argus) — Iranian attempts to switch the currencies of payment for its crude have received their second rebuff in two weeks, with Chinese traders saying a move to the yuan is impractical.

The Tehran government wants to switch transactions away from the dollar and the euro in the face of tougher UN, US and EU sanctions.

State news agency IRNA said today that Iran and China are in talks about settling oil trades through a yuan account in a Chinese bank. Also today, semi-official Iranian media reported vice-president Mohammed Reza Rahimi as saying Iran was free to choose the currencies in which it sells its crude but that: “The important issue is to exclude euros and dollars.”

But a Chinese crude trader told Argus that using the yuan to settle transactions would be impractical as the currency is not freely traded and is likely to continue to appreciate for the foreseeable future. Another noted that China voted in favour of a new package of UN economic sanctions against Iran, so there would be political considerations too.

The yuan is not the only currency that Iran has proposed using for its crude sales in recent days. A European buyer told Argus last week that he had received a phone call from NIOC International, an affiliate of Iran's state-owned oil company NIOC, suggesting he switch future payments to UAE dirhams from euros. European buyers rejected the proposal.

Iran has long sought to shift its own and other oil exporters' trade away from the dollar, arguing for such a move in Opec meetings.

It was only three years ago that Iran moved much of its business into the euro, a currency it is now trying to escape.

NIOC uses a basket of currency for its global sales but bills the vast majority in either dollars or euros. Exports to Asia-Pacific are billed in dollars or, in some cases, Japanese yen, while European customers pay in euros.

Iran exports some 350,000 b/d of crude to China at present.

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