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Iran to accept payment for oil in gold

Sanction-hit Iran will accept gold instead of dollars from its trading partners as payment for oil, central bank Governor Mahmoud Bahmani said Wednesday.

Iran oil prices hike 2012 02 20Enlarge
Iran insists its nuclear program is peaceful and was enraged by the EU’s decision in January to impose a boycott on its oil. It responded by threatening to close the Strait of Hormuz (pictured), the primary Gulf oil shipping lane. (MARWAN NAAMANI/AFP/Getty Images)

Iran will accept gold instead of dollars from its trading partners as payment for oil, central bank Governor Mahmoud Bahmani said Wednesday, according to the country’s official Islamic Republic News Agency.

Crude oil is predominantly traded in US dollars. Iranian banks have been hit by sanctions imposed by the US and the European Union over Tehran’s nuclear program, making it difficult for buyers to make dollar payments to the country’s financial institutions, Reuters reports.

The US and its allies say the program is a cover for developing atomic weapons, charges Iran denies. The country’s trading partners have been forced to explore alternative ways of settling transactions, including paying in their own currencies and through direct barter agreements.

Tehran has already accepted goods as payment from China and India, and will now accept gold from any country “without any reservation,” according to Bloomberg.

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Iran has the third-largest oil reserves in the world. The US already has a ban on the buying of Iranian oil in place, while the EU, which accounts for 20 percent of Iran’s exports, will prohibit any company in any member state purchasing oil from Tehran after July 1.

Japan and South Korea have announced cuts to quotas under US pressure, but China and India, two of the biggest consumers of Iranian oil, have said they will continue imports, according to the BBC

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