Reuters- Nov 23 The U.S. Treasury has reassured Brazilian banks they can finance trade with Iran without fear of sanctions, opening the way to billions of dollars in potential exports of jet planes, buses and equipment, a senior Brazilian official said on Wednesday.

Sanctions on non-U.S. entities doing business with Iranian companies were lifted with implementation in January of the nuclear accord with Iran, but Brazilian banks remained worried they could still face repercussions, said Rodrigo Azeredo, Brazil's top diplomat for trade.

"They feared U.S. and European banks could react by cancelling their credit lines," Azeredo said.

That is expected to change after Treasury officials explained to executives of Brazil's largest banks in Sao Paulo last week that they can deal with Iranian banks as long as the transactions - in dollars or any other currency - do not go through the U.S. banking system and do not involve blacklisted Iranian companies.

The assurances from the Treasury's Office of Foreign Assets Control (OFAC) should remove a financial hurdle to Brazil's plan to expand trade with Iran to $5 billion in a few years from $1.6 billion last year, the Brazilian foreign ministry official said.

"The U.S. government feels almost obliged to update its partners on the sanctions on Iran. They want to show that Iran can benefit too from the nuclear accord," Azeredo said.

U.S. President-elect Donald Trump threatened to scrap the nuclear agreement with Iran during his campaign for not being tough enough, which could bring back secondary sanctions on non-U.S. entities.

The OFAC team's briefing coincided with a visit to Brazil by an Iranian mission headed by Finance Minister Ali Tayebnia seeking to advance trade deals.

Brazil's Embraer, the world's third largest maker of commercial planes, is in talks to sell Iran at least 20 of its E-195 jets worth over $1 billion as the Middle Eastern country moves to renew its aging airline fleets.

Embraer still requires a U.S. license for the sale to Iran of sensitive jet engine technology in its planes.

An Embraer spokesman said the company was hopeful it will get the go-ahead following similar licenses granted recently to European planemaker Airbus to sell commercial planes to Iran.

Brazilian bus maker Marcopolo SA is also looking to sell hundreds of vehicles to Iran. The company declined to comment.

Azeredo said Iranian companies were seeking Brazilian equipment ranging from tractors and electrical generators to hospital and dental equipment. (Reporting by Anthony Boadle; Editing by Jonathan Oatis)