Iran wants euro payment for new and outstanding oil sales

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 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.

It is not the first attempt of Iran to proceed to payments in euro. In 2007 Tehran called for OPEC to pay in euro. However, at the time they took a stand against the proposal of the president of Iran Mahmoud Ahmadinejad.
On the 20th of January Iran reduced the oil price for Europe to compete with Saudi Arabia. The price for Iran Heavy is $6.55.