The US government has updated its sanctions on business dealings with Iran and to allow dollar-denominated transactions, although restrictions on US citizens and access to the US financial system remain.

The US Department of Treasury updated its guidance on 7 October. It said: “Foreign financial institutions, including foreign-incorporated subsidiaries of US financial institutions, may process transactions denominated in US dollars or maintain dollar-denominated accounts that involve Iran or persons ordinarily resident in Iran….”

The relaxed regulations allows dollar-denominated trading with Iranian institutions such as National Iranian Oil Company (NIOC) and the Central Bank of Iran (CBI).

Allowing dollar-denominated trading does not mean other restrictions have also been lifted. “… Foreign financial institutions, including foreign-incorporated subsidiaries of US financial institutions, need to continue to ensure they do not process US dollar-denominated transactions involving Iran through the US financial system or otherwise involve US financial institutions (including their foreign branches), given that US persons continue to be prohibited from exporting goods, services (including financial services), or technology directly or indirectly to Iran, with the exception of transactions that are exempt or authorised by a general or specific licence issued pursuant to the ITSR [Iranian Transactions and Sanctions Regulations],” said the Treasury Department.

The loosening of sanctions comes at an important time for Tehran as it plans to invite international oil companies (IOCs) to bid on the development of its South Azadegan field in late October.

South Azadegan will be the first tender under the new Iran Petroleum Contract (IPC) model, aimed at attracting more interest from overseas firms to the country’s oil and gas sector.