Iran: will only sell oil in Euros

In July Iran will ditch the dollar in favour of the euro as the currency in which it will accept payments for its oil and natural gas exports.




Iranian president Mahmoud Iran's Oil Ministry took the next step toward establishing an oil trading market denominated in euros, rather than the US dollar, by granting a license for the bourse, Iranian state-run television reported.

Just who would trade on the market wasn't immediately apparent. Iranian television did not mention traders or governments willing to market or purchase products on the exchange, nor did it say when it would open for business, the Associated Press (AP) reported.

"Iran has registered an oil bourse on the Persian Gulf island of Kish in which oil would be sold in euros," the broadcast said. Kish, located off the coast of southern Iran, houses the offices of some 100 Iranian and foreign oil companies.

Oil trading is currently only conducted in dollars on markets in New York and London.

According to AP, Iranian legislators earlier this year urged the government to set up the market to reduce the United States' influence over the Islamic republic's economy. They also criticized Oil Minister Sayed Kazem Vaziri Hamaneh, saying he had delayed setting up the bourse.

If the market succeeds, observers say euro-denominated oil sales could eventually convince central bankers to convert some US dollar reserves into euros, possibly causing a decline in the dollar's value.

First floated in 2004 when reformist president Mohammad Khatami was in power, the idea of a euros-traded oil bourse gained new life after the stridently nationalist Mahmoud Ahmadinejad was elected president last summer, AP pointed out.

As the fourth-largest oil producing country in the world, the second in the Organization of Petroleum Exporting countries and controlling about 5 percent of the global oil supply, Iran has a measure of influence over international oil markets. Tehran also partially controls the Persian Gulf's Strait of Hormuz through which much of the world's oil supply must pass, AP added.

Iran has sought to wield its oil resources as a bargaining tool in Tehran's ongoing standoff with the West over its nuclear program.

Iran's deputy oil minister, M.H. Nejad Hosseinian, said Thursday he doubted the UN Security Council would impose sanctions on Iran's oil sector because such a move would drive oil prices higher, AP stated.

Council members are considering imposing sanctions on Iran for defying their request to halt all uranium enrichment-related activities by late last month

Source Here.