Exclusive: Iran wants euro payment for new and outstanding oil sales – source
“Just when you thought that today couldn’t get anymore interesting!”
Iran wants 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 U.S. dollar following last month’s sanctions relief.
A source at state-owned National Iranian Oil Co (NIOC) told Reuters that 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.
“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.
Iran has also told its trading partners who owe it billions of dollars that it wants to be paid in euros rather than U.S. dollars, said the person, who has direct knowledge of the matter.
Iran was allowed to recover some of the funds frozen under U.S.-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.
“Many European companies are rushing to Iran for business opportunities, so it makes sense to have revenue in euros,” said Robin Mills, chief executive of Dubai-based Qamar Energy.
Iran has pushed for years to have the euro replace the dollar as the currency for international oil trade. In 2007, Tehran failed to persuade OPEC members to switch away from the dollar, which its then President Mahmoud Ahmadinejad called a “worthless piece of paper”.
The NIOC source said Iran’s central bank instituted a policy while the country was under sanctions over its disputed nuclear 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.
BOOST FOR EURO TRADE
Iran has the world’s fourth-largest proved reserves of crude oil, and expects to quickly increase production, which could lead to tens of billions of euros worth of new oil trade.
Iran’s insistence on being paid in euros rather than dollars is also a sign of an uneasy truce between Tehran and Washington even after last month’s lifting of most sanctions.
U.S. officials estimate about $100 billion (69 billion pound) of Iranian assets were frozen abroad, around half of which Tehran could access as a result of sanctions relief.
It is not clear how much of those funds are oil dues that Iran would want back in euros.
India owes Tehran about $6 billion for oil delivered during the sanctions years.
Last month, NIOC’s director general for international affairs told Reuters that Iran “would prefer to receive (oil money owed) in some foreign currency, which for the time being is going to be euro.”
Indian government sources confirmed Iran is looking to be paid in euros.
Tehran has asked to be paid using the exchange rates at the time the oil was delivered, along with interest for those payment delays, Indian and Iranian sources said.
Indian officials are working on a mechanism that could involve local banks United Commercial Bank (UCO) and IDBI Bank for handling payments to Iran, one Indian government source said.
UCO CEO R.K. Takkar said the bank is involved in payments to Iran, but did not say if there were any plans to change the payment mechanism. IDBI CEO Kishor Kharat could not be reached for comment.
India could also try to resume payments through Turkey’s Halkbank, a channel it stopped using in 2012, or by direct transfer to Iranian banks through the global SWIFT transaction network.
With Iran now again linking to international lenders through SWIFT, the NIOC source said it was easy for Tehran to be paid in any currency it wants, adding: “And we want euros.”
(Additional reporting by Devidutta Tripathy in MUMBAI; Editing by Paritosh Bansal and Ian Geoghegan)
HA, ….I think we even mentioned zerohedge had it………….. 🙂
Fair enough Professor. I; however, thought the post from Reuters was an appropriate one.
Thaks Big Al.
I posted the Reuters article, cite. (Yesterday)
Another interesting comments from the “other Doc”
http://www.silverdoctors.com/stealth-gold-bull-market-continues-real-time-analysis-eric-dubin/
Some people may have missed it.
RT reported it a couple days ago?
Just another step in changing the world reserve currency.
What I think is interesting is Iran has decided to accept Euro, for some time previously they were selling for gold.
That doesnt seem to get a mention.
I wonder if the change from gold to euro might be part of negotiations for dropping the American dollar.
Iran could have chosen Yuan/Ruble, that could still happen.
It is a strange move, rather forcing gold to be used.
It may have something to do with Iran worrying about being vulnerable to attack.
(Certainly their purchase of Chinese made equivalents to F-22s indicates some concern for defense)
They may have made inference of what happened in Libya when they stated intention of introducing a Gold Dinar, or the overthrow of Iraq went they talked about gold for oil.
Self correcting computers! went should be when.
I also omitted a “than” in rather than.
thanks for bringing this up bb. It is certainly an important point!
And let’s not forget where the same demand got Saddam Hussein when he didn’t want to accept dollars for oil any longer.
Absolutely T, and Gaddafi,
Iran is a little more formidable than either of them tho.
Iran has been accepting gold for oil, changing to Euro, might actually be preventing an invasion. could be just delaying one too I suppose.
The neo cons cant be trusted.
We shall see I guess.
I agree with your statement bb…………”Iran is a little more formidable ….”
Actually I kinda giggle at an american invasion of Iran, not that its in any way funny, but Iran has thousands of missles aimed at American warships in the area, they have missles that can do real damage to the arab states, they can hit Israel too.
They have the s 3/400? for defense now.
Iran would be a hornets nest for the west, and they are kinda buddies with China and Russia.
An invasion of Iran could start ww3.
Basic brains would say no way an invasion will happen, but as PCR says, the neocons are insane, so, we dont really know.
I completely agree with you, bb!
Plus they have got a very good buddy..RUSSIA..Who have a very good buddy called CHINA..& as we all know the US only ever takes on tiny & third world countries….So they (US) would not have the gonads to play silly buggers with IRAN.
Interesting opinion bb.
SIX LARGE MINING COMPANIES QUIT …LBMA………Andy Hoffman….at FSN
Hello FFM,
Any link to the article please ? Tried to find it but couldn’t. Maybe I looked at the wrong place…
Cheers,
LPG
FFM,
Found something on the topic – I’m sorted.
Please ignore my request.
Best,
LPG
Except we blogged about that information yesterday! Old news.
Good article:
http://seekingalpha.com/article/3874166-resource-sector-digest-gold-fire