Iran Seeking to Ditch US Dollar in Oil Trade: Report
TEHRAN (Tasnim) – Iran plans to recover tens of billions of dollars it is owed by India and other buyers of its oil in euros and is billing new crude sales in euros, too, looking to reduce its dependence on the US dollar following last month’s sanctions relief, media reports said.
Iran will charge in euros for its recently signed oil contracts with firms including French oil and gas major Total, Spanish refiner Cepsa and Litasco, the trading arm of Russia's Lukoil, Reuters quoted a source at the National Iranian Oil Company (NIOC) as saying on Friday.
“In our invoices we mention a clause that buyers of our oil will have to pay in euros, considering the exchange rate versus the dollar around the time of delivery,” the NIOC source said.
Lukoil and Total declined to comment, while Cepsa did not respond to a request for comment, according to the report.
Iran has also told its trading partners who owe it billions of dollars that it wants to be paid in euros rather than US dollars, the unnamed source said.
Iran was allowed to recover some of the funds frozen under US-led sanctions in currencies other than dollars, such as the Omani rial and UAE dhiram.
Switching oil sales to euros makes sense as Europe is now one of Iran’s biggest trading partners.
The NIOC source said Iran’s central bank instituted a policy while the country was under sanctions over its nuclear energy program to carry out foreign trade in euros.
“Iran shifted to the euro and canceled trade in dollars because of political reasons,” the source said.
Replacing the US dollar with other currencies is something many countries have been after in recent years.
Back in January 2014, the World Bank’s former chief economist called for an initiative for replacing the US dollar with a single global super-currency, saying it will create a more stable global financial system.
“The dominance of the greenback is the root cause of global financial and economic crises,” Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank. “The solution to this is to replace the national currency with a global currency.”