It has agreed to loan the National Iranian Oil Company (NIOC) $1bn equivalent in euros, guaranteed by future exports of refined oil products, sources told Reuters.
The deal is the first major contract signed between Iran and a trading house since sanctions against Iran were lifted last year.
The NIOC revealed this week that several European oil and gas companies, including French major Total, Royal Dutch Shell and Eni, will be eligible to bid for a wave of new oil and gas projects in the country.
Iran has already struck deals with foreign energy firms in recent weeks, including a provisional agreement with Shell in early December to explore investment in three of the its largest oil and gas fields.
BP has opted out of further agreements with Iran at this stage. The British oil major, which has its roots in the Anglo-Persian Oil Company, has the biggest US exposure of any European oil firm. It is taking a more guarded approach with Iran ahead of an expected harder line on the country under a Donald Trump presidency.
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Anthony Woolich, head of competition and regulation at law firm Holman Fenwick Willan, said: "Iran intends to award more contracts early this year, including a tender of exploration and production rights, and is reported to be seeking $200bn worth of investment in oil and gas over the next five years.
"BP is reported to have reopened an office in Tehran and acquired a cargo of Iranian oil in October, but to have been deterred from stronger interest by a combination of alternative investments and continuing US sanctions which generally prevent US persons, such as Exxon Mobil and Chevron, from engaging in transactions with Iran."
A landmark nuclear deal intended to prevent Iran from obtaining nuclear weapons was signed between Iran and the UN Security Council's permanent five members (the US, UK, France, China and Russia) and Germany in 2015. Sanctions against Iran were later lifted in January last year, which included it being able to sell its oil in international markets.
Vitol declined to comment.