Reuters reported that Iran could have nearly USD 5 billion of cash trapped in South Korea by the end of the year as sanctions stop it repatriating money from oil sales.
Korean government sources said that sanctions do not penalize non US refiners from buying Iranian crude, but they make it hard for foreign banks to pay the country the hard currency that makes up around 50% of government revenue.
Just this week, Indian refiners began paying around USD 5 billion of oil debts after struggling for 7 months to find a way to get money to Tehran. Washington wants to isolate Tehran over its nuclear program which it believes Iran is using to develop weapons. Tehran says it needs nuclear power.
South Korea is one of Iran's top crude buyers, importing around 230,000 barrels per day on average, based on total imports in the H1 of the year. Its refiners are paying Iran for oil into bank accounts in South Korea.
The source said that the trapped cash pile has already reached up to USD 3.82 billion. That could reach USD 4.76 billion by the end of the year. Seoul last year allowed Iran's central bank to open accounts denominated in Korean won after South Korea blacklisted the Seoul branch of Bank Mellat and 101 other Iranian companies as part of international sanctions handed down over Iran's nuclear development plans.
According to official Korean data, Iran can use the won funds to buy goods from South Korea but runs a trade surplus with Asia's fourth largest economy amounting to around USD 400 million a month. South Korea has almost no natural resources so is heavily dependent on oil imports.
A source at the South Korean central bank confirmed that Iran cannot repatriate the funds due to international sanctions but declined to confirm the amount. Iran's central bank keeps that money it has received from Korean buyers including oil refiners, hoping that it can bring out the money later when sanctions are lifted.
Iran's central bank can not transfer won funds out of South Korea even if we exchanged the money into other currencies because international banks would not handle the transfer under the sanctions. Iran's central bank has the won accounts at Industrial Bank of Korea and Woori Bank both owned by the Korean government..
( Source: www.steelguru.com )