EU Could Switch To Euros In Oil Trade With Iran

The European Union (EU) is considering switching to euros instead of U.S. dollars in the oil trade with Iran, Sputnik reported on Wednesday, quoting a diplomatic source.

Europe—collectively one of Iran’s biggest oil customers after China and India—is trying to salvage the Iran nuclear deal after President Donald Trump withdrew the U.S. from the pact and paved the way to renewed sanctions on Iran, including on its energy sector and crude oil sales.

Iran, for its part, said as early as in mid-April that it would be switching to euros from U.S. dollars in reporting foreign currency amounts, to reduce the reliance on the dollar as it was expected that President Trump would not waive the sanctions this time around.

The EU vowed on Tuesday to seek ways to work and trade with Iran.

“We, together, regretted the withdrawal of the United States from the Iran nuclear deal and we recognised that the lifting of nuclear-related sanctions and the normalisation of trade and economic relations with Iran constitute essential parts of the agreement,” the European Union’s High Representative for Foreign Affairs and Security Policy, Federica Mogherini, said on Tuesday after meeting with the foreign ministers of the UK, France, and Germany, and separately with Iran’s foreign minister.

The EU has launched expert discussions with Iran aiming to arrive at practical solutions in the next few weeks, Mogherini said. The issues that the talks will address include “maintaining and deepening economic relations with Iran; the continued sale of Iran’s oil and gas condensate petroleum products and petrochemicals and related transfers; effective banking transactions with Iran; continued sea, land, air and rail transportation relations with Iran; the further provision of export credit and development of special purpose vehicles in financial banking, insurance and trade areas, with the aim of facilitating economic and financial cooperation, including by offering practical support for trade and investment.”

The EU’s pledge to continue trading with Iran comes as Europe continues to buy Iranian oil, but some refiners and traders are flagging financing issues as having the potential to stop crude trade with Iran. Another big hurdle to Iran’s crude oil exports could be issues with the insurance of tankers carrying oil out of Iran, experts have warned, while some shipping companies are already refusing to commit tankers to new Iranian cargoes, for fear of complications in the cargo and insurance related payments.

By Tsvetana Paraskova for Oilprice.com