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Iran said on Tuesday that South Korea had started to release the first US$1 billion of the US$7 billion Iranian oil funds blocked in Korean banks because of the U.S. sanctions on Tehran, but Seoul says that any transfer of the funds will be made only after consultations with the United States.
After the United States pulled out from the so-called Iran nuclear deal in May 2018, it imposed sanctions on Tehran, specifically targeting its oil industry as a vital source of revenue. As a result, somewhere between US$7 billion and US$8 billion in oil revenues held at Korean banks were frozen by the banks, cutting off Iran’s access to the money.
The strained relations between Iran and South Korea in recent years also led to the Islamic Revolution Guards Corps (IRGC) of Iran seizing last month a South Korea-flagged tanker in the Strait of Hormuz, the most crucial oil chokepoint in the world.
After talks between Iran and South Korea in recent days, Seoul has now agreed to unfreeze U$1 billion of the funds as a first step to potentially resolving the dispute between the two countries, Bloomberg quoted Iranian government spokesman Ali Rabiei as saying at a news conference on Tuesday.
On Monday, Iranian media reported that Abdolnaser Hemmati, Governor of the Central Bank of Iran (CBI), met with the South Korean Ambassador to Tehran, Ryu Jeong-Hyun, to negotiate the details of allocating a part of Iranian funds blocked in South Korea for purchasing essential goods from third countries.
Yet, South Korea’s foreign ministry said on Tuesday that “any release of the money will take place after consultations with the United States,” as carried by the Yonhap news agency.
“The actual unfreezing of the assets will be carried out through consultations with related countries, including the United States,” the ministry said.
By Michael Kern for Oilprice.com
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Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com,