The European Union plans to switch to the euro for oil purchases from Iran, eliminating the US dollar as the two sides work to protect bilateral trade against possible American sanctions, a Russian report says.
“I’m privy to the information that the EU is going to shift from dollar to euro to pay for crude from Iran,” the website of Russian news channel RT said on Wednesday, citing a diplomatic source who spoke to Sputnik news agency.
Iran exports about 450,000 barrels per day (bpd) of crude oil to Europe and around 1.8 million bpd to Asia. The country has boosted its oil production nearly 1 million bpd since the nuclear deal lifted Western sanctions in January 2016.
US Treasury Department has instructed countries to make significant cuts to their imports over the next six months to be considered for potential sanctions relief. The US government has said the sanctions on Iran will go back into force from November 5.
Iran’s main oil clients in Europe are Italy, France, Greece, Spain, Poland and Turkey. Turkey is the biggest importer with 250,000 bpd, followed by Greece at 120,000 bpd and France between 70,000-100,000 bpd.
Western analysts think an estimated 500,000 bpd of Iranian exports will be disrupted by November this year, but Iran’s veteran Minister of Petroleum Bijan Zangeneh has said shipments will not be affected.
“Trump’s decision will not have any impact on our oil export … that era is history now,” Zanganeh said recently.
Iran’s Foreign Minister Mohammad Javad Zarif met with his British, French and German counterparts in Brussels on Tuesday to discuss mechanisms for keeping bilateral trade on track after US withdrawal from the 2015 nuclear deal.
EU foreign policy chief Federica Mogherini said EU experts were aiming to come up with concrete proposals in the coming weeks on nine key issues including ensuring Iran could sell its oil and gas products and have access to international finance.
Mogherini acknowledged the enormous challenge of finding a way around US sanctions punishing businesses trading with Iran.
“We know it’s a difficult task but we are determined to do it and we have started to work to put in place measures that help ensure this happens,” she told reporters.
EU experts have already started work on measures to get round US sanctions on Iran, Mogherini said.
President Donald Trump’s decision to pull out the US from the nuclear deal and reimpose sanctions has also added fresh momentum to efforts to start trading oil in yuan following China’s launch of crude oil futures.
China is the world’s biggest importer of crude oil and also the biggest buyer of Iranian oil, with the recent boost in Shanghai futures partially attributed to the sanctions decision.
Iranian officials have already reiterated that they prefer the country’s future transactions to be carried out in the currencies other than the dollar.