Iran's oil trade with China proceeds apace in Euros as the Islamic Republic makes an end-run around the weakened US dollar with a 3.2 billion Euro deal.

 
The move comes as US sanctions over Iran's nuclear program have blocked the ability of many nations to pay for Iranian oil in dollars has left the Islamic Republic oil-rich and cash-strapped. 
 
Iranian officials have reportedly been growing increasingly angry about the inability of the country's biggest oil customers such as China and India to pay cash, which has contributed to a shortage of hard currency for the country.
    
"Both China and India have been happy to keep Iran's money in their banks and try to get Iran involved in barter deals to sell their junk, or given yuan and rupees instead of hard currencies," one Iranian former official who chose to remain anonymous said.
 
This despite previous Iranian claims that US sanctions were having 'no effect.'
 
Chinese companies first started paying in euros for their Iranian crude in 2006 and have also considered payment in yuan, considered a soft currency, industry sources said. Now China's government is following suit.
 
Iran is China's third-largest crude supplier, shipping around 540,000 barrels per day (bpd) in the first six months of the year, or more than 10 percent of Beijing's 5.1 million bpd of imports. The flow grew 50 percent from the first half of 2010.
 
Tehran has cut supply to India for August as sanctions have made it difficult for New Delhi to find a way for its refiners to pay for Iranian oil. 
 
Chinese refiners have suffered no such problems in dealing with Iran, the sources said, because its deals bypass the weakened US dollar.
 
"We've been paying in euros all these years," said a Chinese buyer of Iranian oil.
 
"There is no problem with euro payment," said a second industry executive with direct knowledge of the oil trade between the two nations.
 
The volume of crude Iran sells China has increased even though Chinese traders have said prices of Iranian oil were uncompetitive compared to other Middle East supplies.
 
The deal underscores the close relationship Iran has with China who has routinely protected the Islamic Republic, and its ally Syria, with its  Security Council veto at the UN.