* Noor Islamic says complies with regulations on Iran
* WSJ says bank facilitated some 60 pct of Iran oil sales
* Tanker off Singapore, barter highlight sanctions impact
* UN nuclear agency concerned about military site -diplomats
By Rachna Uppal and Martina Fuchs
DUBAI, Feb 29 (Reuters) - The U.S. government has forced Dubai-based Noor Islamic Bank to stop channelling billions of dollars from Iranian oil sales through its accounts, part of increasing Western pressure to curb Tehran’s disputed nuclear programme.
The measure cuts off another of Iran’s links to the international banking system, forcing it to seek other channels to handle vital foreign currency earnings on oil sales.
The move, which took place in December, is embarrassing for traditional U.S. ally the United Arab Emirates because the bank is partly state-owned and its chairman is the son of Dubai’s ruler, Sheikh Mohammed bin Rashid al-Maktoum.
In another indication of the impact of U.S. and European sanctions, traders said Iran was trying to sell about 200,000 tonnes of crude oil from a supertanker floating off Singapore, a rare move that highlights how Tehran’s oil exports are being hindered.
Ever tighter sanctions imposed by Western countries over Iran’s nuclear work have forced many Iranian companies to resort to barter to pay for their imports, a Reuters report found and the Central Bank of Iran is now accepting accept gold as payment for oil as dollar transfers get harder.
The United Nations and Western countries have imposed a series of economic sanctions on Iran during the past five years over what they say are efforts to develop nuclear weapons.
Diplomats at the U.N. nuclear watchdog heard on Wednesday that the agency was concerned about unspecified activities at a military site that Tehran has not allowed it to visit.
The International Atomic Energy Agency asked to visit the Parchin military complex near Tehran after issuing a report in November that suggested Iran was pursuing military nuclear technology, an allegation Tehran denies.
The report helped trigger the latest round of Western sanctions and bolstered hawkish politicians in Israel and the United States calling for military strikes on Iran.
A spokesman for Noor Islamic said it complied with all international regulations on Iran.
“When we became aware, in December 2011, that unilateral U.S. sanctions were to be applied against a number of Iranian banks we took pre-emptive action to end our business relationships with Iranian banks licensed in the UAE,” he said.
The Wall Street Journal had reported that Noor Islamic agreed in mid-December to close what people briefed on the operation characterised as Iran’s single largest channel for repatriating foreign currency oil receipts.
The paper said the bank had facilitated as much as 60 percent of Iran’s foreign oil sales - estimated at $80 billion - by late last year.
A banking source familiar with the matter said the bank had been winding down its positions since December and suggested other local banks had also been dealing with Iran, although Noor Islamic appeared to have carried the most volume.
“The bank (Noor) made so much money out of this that they just milked it,” the source said, suggesting it had handled tens of billions of dollars. “It was just too good to be true.”
It was not clear if other banks were under investigation but government officials confirmed Noor was the first to be targeted in the country. Turkey’s Halkbank is also known to handle payments for Iran’s oil sales.
The world’s biggest electronic bank clearing system, SWIFT, is also preparing to block the Iranian central bank from using its network to transfer funds.
The United States last year tightened controls on financial institutions connected to the Islamic Republic, most recently on Nov. 21. “Financial institutions around the world should think hard about the risks of doing business with Iran,” U.S. Treasury Secretary Timothy Geithner said at the time.
An official at the UAE Ministry for Economic Affairs said only Noor Islamic had been targeted so far.
“Of course, as the UAE government, we will comply with the U.N. resolutions,” Khalid al-Ghaith, assistant foreign minister for economic affairs, told Reuters at a conference in Abu Dhabi.
He said officials were in contact with the U.S. to try to reduce any possible harm to the UAE banking system.
A U.S. Treasury official declined to comment on Noor Islamic, but said the United States had worked closely with the UAE government. “We remain engaged with our international partners, including the UAE, to ensure the effectiveness of international sanctions against Iran,” the official said.
In the oil market there were signs of Iran’s difficulties in addition to the supertanker off Singapore, as traders said a vessel heading towards China with about 270,000 tonnes of crude oil was carrying volumes greater than the usual term-contract supplies to the world’s second largest oil consumer.
“Iranian light sweet crude is being offered to blenders, especially those that operate floating storages off Malaysia, and to players who sell refining feedstock into China,” a Singapore-based Western crude trader said.
The Noor Islamic move was seen as a positive for relations between the United States and UAE, which recently announced a $3.48 billion deal for a U.S.-built missile defence system.
Yet Dubai, long a major trading partner with Iran, has benefited from tougher sanctions pushing more business its way. It has a sizeable Iranian expatriate population and hosts a fleet of traditional wooden dhows, boats that transport goods across the Gulf to Iranian ports every day.
Iran is the UAE’s top destination for re-exports, or goods imported into the UAE and sold on to Iran. Figures released on Wednesday showed these re-exports rose by 51 percent in the first 10 months of 2011 to 36.3 billion dirhams ($10 billion).