Iran is accepting yuan for some of the approximately $20 billion worth of crude the OPEC member supplies to its main client, China, annually, an Iranian diplomat said on Tuesday, as the two countries try to maintain trade ties despite Western sanctions.
U.S. sanctions against Iran have made paying for its crude with hard currency difficult for top oil customers including China and India, forcing them to look for alternatives.
The U.S. dollar and euros are the two main currencies used in the global oil trade.
But tougher Western measures aimed at pressuring Iran to halt its nuclear programme have forced importers of Iranian oil to pay in the Korean won and the Japanese yen.
The Financial Times on Monday reported that China for months has been transferring renminbi to Tehran through Russian banks to pay for Iranian crude. OPEC's second largest oil producer was using the currency to spend on goods and services imported from China.