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Sri Lanka’s barter trade agreement with Iran—exchanging tea for oil payments—is facing potential disruption due to the ongoing crisis in the Middle East, according to Plantation and Community Infrastructure Development Minister Samantha Vidyaratne.
The barter deal, launched in 2023, was designed to settle a $250 million debt for oil imported back in 2012. The agreement, formalised in 2021, had been delayed previously due to Sri Lanka’s severe dollar shortage, which triggered the worst financial crisis in over seventy years.
Under the terms, Sri Lanka agreed to send $5 million worth of tea monthly over 48 months. The Ceylon Petroleum Corporation (which bought the oil) pays rupees to the Tea Board, which arranges tea shipments through local exporters. Iranian importers then pay in rials to the National Iranian Oil Company.
Minister Vidyaratne confirmed that around $145 million remains to be settled. He added that a cabinet subcommittee has been formed and has already met to discuss alternative plans to sustain tea exports if the regional crisis persists. Iran accounts for over 3% of Sri Lanka’s total tea exports.
Despite the challenges, the Minister expressed cautious optimism, noting that the current truce between warring factions in the region offers hope for stability.
