Iran still able to beat sanctions and sell oil to key markets in Asia

To continue selling crude oil to China, Iran is delivering the oil to its No 1 customer on its own tankers, backed by state insurance, not on the commercial tankers used in the past.

To sell to India, Iran is accepting payment in rice, medicine, engineering supplies and steel.

Japan remains so eager to buy from Tehran that the government in Tokyo is furnishing the multibillion-dollar marine insurance its ships need to carry Iranian crude.

Despite what the US administration calls some of the toughest economic sanctions ever imposed, including a European Union oil embargo and a US ban on financial institutions doing business with Iran's central bank, Tehran is finding plenty of legal ways to sell or barter oil to its most important markets in Asia.

The new deals are expensive, time-consuming and risky. But experts say they are easing some of the burden on Tehran's battered economy and buying time for Iran's leaders as Washington and its allies scramble to curb the country's nuclear programme.

US officials say they are not trying to choke off Iran's oil trade totally - at least not yet. In a bid to preserve bilateral relationships and minimise disruptions to energy markets and the global economy, the Obama administration issued sanction waivers to China, India, Japan, South Korea and 16 other nations.

Nevertheless, the European Union embargo on Iranian crude, which took effect in July, and US-led restrictions on its banking system have shrunk Iran's oil exports by about 1 million barrels a day to half of last year's levels.

With EU companies that sell marine insurance to most of the world's tankers banned from covering any shipment by an Iranian-owned company, Asian governments and Iran have stepped in to provide the insurance necessary to deliver the oil.

India has also allowed a handful of Iranian financial institutions to open accounts in the South Asian nation in the local currency, the rupee, to get round the US banking curbs.

India is also selling basic goods that could help Iran stave off the effect of sanctions.

Nigel Kushner, a British lawyer who specialises in sanctions, cited Indian traders as saying they were stepping up exports of rice, pharmaceutical goods, medical equipment, cooking oil, engineering supplies and steel. Iran pays for them in rupees.

The accounts are often established with proceeds from oil sales to India, and the goods Iran purchases are deducted from the balance, according to experts familiar with the trade.

"Iran is getting what it wants," said Kushner, chief executive of Whale Rock Legal, a law firm in London. "It takes a little bit longer and costs a little bit more, but they are getting what they want."

None of these mechanisms violate US, EU or United Nations sanctions, according to experts. And in some cases, the buyers are using Iran's vulnerability to strike favourable deals.

Independent experts believe China has negotiated discount rates for Iranian oil, although Tehran denies cutting prices.

What is clear is that the more Tehran has to use local currencies and barter trades, the less it has access to the foreign exchange it needs to support nuclear development, as well as other national programmes.