The future of letters of credit (L/Cs) for trade with Iran remains in doubt after Iran and six world powers failed to agree a deal over financial sanctions imposed on the Islamic republic as a result of its nuclear programme.

A deal expected to at least make L/Cs more available for Iranian business was due to be struck in late November, but Iran has now agreed with China, France, Germany, Russia, the UK and the US to continue negotiations for a further seven months.

Vienna talks

Iran and the world powers will now continue negotiations over Iran's nuclear programme and extend the Joint Plan of Action that suspended some economic sanctions against Iran.

Recent talks in Vienna aimed to place strict limits on Iran's nuclear programme in return for broad sanctions relief.

Substantial progress

Despite the failure to meet the November deadline, US secretary of state, John Kerry, said "real and substantial progress" had been made in the talks.

Rather than soften US sanctions, President Barack Obama's administration is under some domestic pressure to impose yet more sanctions on Iran.

L/C implications

Kerry however takes the view that "this is not the time to get up and walk away" and said new sanctions would be counterproductive and could cause cracks in the international sanctions regime.

Under current sanctions, banks have been substantially barred from writing L/C business involving Iran while the US has imposed hefty fines on some banks for contravening sanctions.

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