A laterally continuous, 3m thick oolitic grainstone has been studied in cores from two wells from the South Pars field (offshore Iran). This high porosity but low permeability interval occurs at the top of the gas-bearing succession in the Permian Upper Dalan Member, and is equivalent to the informally-defined K4 unit of the Khuff Formation. This interval can easily be traced between the wells and overlies high-energy marine deposits. It is composed of oomouldic, fine-grained azooic grainstones with cm-thick coarser-grained layers. Horizontal to oblique lamination or steep foresets were observed together with pinstripe lamination. Petrographic observations indicate a clean oomouldic grainstone with very thin chitonic rims associated with pedogenetic imprints as first-generation cements. Later cements include early vadose meniscus and pendant cements in coarser-grained layers and pseudophreatic cements in the finer-grained material with a tighter pore network, prior to ooid dissolution. Rhizoliths were observed in cores and thin-sections. The pedogenic imprints and the early vadose cementation, both related to emergence, as well as the presence of pinstripe lamination, suggest an aeolian depositional setting. This interval is the first aeolianite recorded within the Khuff Formation or equivalent units, and the first hydrocarbon-bearing carbonate aeolianite described in a hydrocarbon-producing unit. The discovery of aeolianites has important implications for regional sequence-stratigraphic interpretations and reservoir volume calculations. These deposits do not conform to classic subaqueous sequence stratigraphy and do not record eustatic variations in the associated marine basin. Their recognition is crucial for well-to-well correlations.