Europe to drop petrodollar in trade with Iran?

Europe to ditch US dollar in payments for Iranian oil – source

RT,

16 May, 2018

The European Union is planning to switch payments to the euro for its oil purchases from Iran, eliminating US dollar transactions, a diplomatic source told Sputnik.

Brussels has been at odds with Washington over the US withdrawal from the Iran nuclear deal, which was reached during the administration of Barack Obama. President Donald Trump has pledged to re-impose sanctions against the Islamic Republic.

“I’m privy to the information that the EU is going to shift from dollar to euro to pay for crude from Iran,” the source told the agency.

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9:25 AM - May 16, 2018

Earlier this week, EU foreign policy chief Federica Mogherini said that the foreign ministers of the UK, France, Germany, and Iran had agreed to work out practical solutions in response to Washington’s move in the next few weeks. The bloc is reportedly planning to maintain and deepen economic ties with Iran, including in the area of oil and gas supplies.

Mogherini stressed that the sides should jointly work on the lifting of sanctions as an integral part of the historic nuclear deal. “We're not naive and know it will be difficult for all sides.”

READ MORE:US imposes new sanctions on Iranian individuals and bank – treasury department

The Iran nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), was sealed three years ago in Vienna between Tehran and the P5+1 powers (China, France, Russia, UK, US, plus Germany). The agreement saw decades-long international sanctions lifted in exchange for Iran curbing its controversial nuclear program. On January 16, 2016, the parties to the deal announced the beginning of its implementation.

Lifting of international sanctions gave the Islamic republic access to the world's markets for the first time in nearly four decades. Since then Tehran managed to significantly to raise its exports of crude.

However, oil is pegged to the US dollar on international markets, making it difficult for Iran's partners to make payments for crude and for Tehran to receive them. Switching to alternative settlement currencies allows both sides to continue trading despite US sanctions.