Rostam Ghassemi

The British government has blocked efforts by Royal Dutch Shell to settle its $2.3-billion debt to Iran with payments in grain or pharmaceuticals, Reuters reports.

Last week, Iranian Oil Minister Rostam Ghaseemi announced that an agreement had been reached with Shell for payment of the company’s debt.

The report quotes an industry source saying: “Politics come and go, but it's in the interests of Shell and its shareholders to pay its debts and maintain a relationship with a leading oil producer like Iran.”

Shell reportedly continued trading with Iran even beyond the EU blockage of June 2012 and was permitted to continue under a provision for pre-existing contracts.

International sanctions have cut Iran’s oil revenues in half and imposed financial restrictions that have forced Iran to accept alternative modes of payment for its oil.

The British government has made no official statement as to why it is blocking Shell’s proposed payment method.