Royal Dutch Shell and other oil companies are taking less Iranian crude because of poor economics and the difficulty of making financial transactions with Tehran, industry sources said.

The lower sales coincide with a build-up of Iranian crude in storage and a draft UN resolution to expand sanctions against the Islamic Republic - the world's fifth largest oil exporter - over its nuclear work.

Sources said that the economics of Iranian crude have been undermined by the republic's aggressive policy in setting monthly official selling prices for its customers. They have to pay in euros, which this week hit a four-year low against the dollar.

For several years, oil companies have been reducing their exposure to Iranian crude, particularly following sanctions designed to prevent banks backing Iranian transactions introduced in 2007.

'The Iranians have been quite ambitious in the way they have been setting their official selling prices especially with the difficulty experienced by most companies from a financial point of view just to transact with them,' said a source with a major oil company which buys Iranian crude.

'The combination of the two is making most of the players in the market reduce their positions with the Iranians.'

Iran on Wednesday dismissed the draft UN resolution to expand sanctions as lacking legitimacy. Historically, Tehran has found ways around sanctions aimed at hampering its oil trade and has said any sanction targeting its oil trade would be 'ineffective'.

Another industry source said the practicalities of buying Iranian crude were challenging. 'We have to do the transaction in euros,' he said on condition of anonymity. 'And we have to use a non-US bank.'

Shell declined to comment on its trading strategy. The two other European majors BP and Total, who also buy crude from Iran, also declined to comment.

The sources did not provide precise details of how much Iranian crude they are buying. As of 2008, Shell was the second-biggest European customer taking 100,000 barrels per day (bpd) while BP was among the smallest, buying 25,000 bpd.-Reuters