State-run refiner Mangalore Refineries and Petrochemicals Ltd has struck a deal with Iran to supply around 250,000 tonnes of diesel to Iran at a premium of about $4.40 to Middle East Gulf quotes.

Under the agreement, MRPL will sell one 30,000-tonne cargo every month till December this year to Neftiran Intertrade Company, a fully owned subsidiary of the National Iranian Oil Co (NIOC), MRPL managing director R Rajamani said.

MRPL sold its first spot cargo to Iran last month as the Iranian National Oil Co sought new suppliers after Reliance halted sales to the OPEC member.

Sources said Reliance's bankers refused to confirm letter of credit raised by Iran's central bank due to increasing Western pressure.

Rajamani said Iran would now use a 30-day open credit line settled in euros, as against the earlier policy of asking buyers to open letters of credit for purchases.

Iran, forced to import auto fuels due to a lack of production from its aging refineries, had this winter also bought diesel from Singapore after Reliance stopped supplies in the second half of last year.

MRPL annually imports around 120,000 bpd crude from Iran for use at its 194,000 barrels per day (bpd) refinery in costal Karnataka.

Reliance, meanwhile, has awarded term tender to sell diesel to traders Trafigura, Kuwait's IPG and Africa-focused Galana as it prepares for a surge in supply later this year.

Reliance's new 580,000 bpd refinery at Jamnagar is expected to come on stream in July, adding to the exports already coming from its existing 660,000 bpd plant.

The 0.05 per cent sulphur diesel cargoes - offered in three different sizes of 40,000 tonnes, 60,000 tonnes and 80,000 tonnes - were awarded at a premium of around $6 a tonne to Arab Gulf quotes, sources said.