Sri Lanka’s tea-for-oil barter trade agreement with Iran is likely to face disruptions due to the current tensions in the Middle East, according to Minister of Plantation and Community Infrastructure Development, Samantha Vidyaratne.
The barter deal, initiated in 2023, was designed to repay a $250 million oil debt from 2012 by exporting $5 million worth of tea monthly over 48 months. The agreement was delayed by Sri Lanka’s 2022 economic crisis and resumed after the situation stabilized.
Under the arrangement, the state-run Ceylon Petroleum Corporation provides rupees to the Tea Board to facilitate tea shipments, while Iranian importers pay in rials to the National Iranian Oil Company.
Minister Vidyaratne confirmed that $145 million remains to be settled and noted that a cabinet subcommittee has been appointed to explore alternative options to maintain tea exports if regional instability continues.
He added that Iran accounts for over three percent of Sri Lanka’s total tea exports, but expressed cautious optimism that the situation would stabilize, citing a currently held truce in the region.
