Iran Stops Oil Transactions in Dollars
By Chika Amanze-Nwachuku with agency report, 12.10.2007
Major crude oil producer Iran has made good her threat to stop oil transactions in dollars as the country’s Oil Minister Gholam Hossein Nozari stated at the weekend that the country has stopped selling oil in dollars in line with the policy of selling crude in non-dollar currencies.
Iran and Venezuela had at the OPEC third heads of state summit in Riyadh , Saudi Arabia last month, urged the organization to drop the US Dollars as the only currency for oil.
The Iranian Oil Minister who spoke on Saturday said his country has completely stopped carrying out its oil transactions in dollars, labelling the United States dollar an "unreliable" currency." At the moment, selling oil in dollars has been completely halted, in line with the policy of selling crude in non-dollar currencies.
"The dollar is an unreliable currency, considering its devaluation and the oil exporters' losses," a news agency report quoted Nozari as saying.The world's fourth largest oil exporter, Iran has massively reduced its dependence on the dollar over the past year in the face of US pressures on its financial system and the fall in the dollar.
Although the Oil Minister was silent on which currencies Iran was now being paid, in the past, officials have said most oil income was in euros, with a significant percentage in yen.Japan, which purchases 20 percent of Iran 's crude oil, has recently agreed to pay for the crude oil in yen, officials have said. The UAE dirham has also been mooted as a possible payment currency.Iran has in the past months been whittling down the proportion of dollars in its oil revenue income. Officials in October said that dollars accounted for only 15 percent of payments and predicted the amount would fall to zero.The United States has in recent months successfully encouraged major European and Asian banks to cut their dealings with Iran in a bid to make the Islamic Republic give way on its controversial nuclear programme. Washington has also blacklisted major Iranian banks for alleged support of terrorism and seeking nuclear weapons, charges of which were however denied by Tehran .The fall of the dollar, which has weakened considerably against the euro and other currencies in the past 12 months, has affected the revenues of OPEC members as most of them price and sell their oil exports in the US currency.Iran has also reduced its dollar assets held in foreign banks and urged the Organization of Petroleum Exporting Countries (OPEC) to take collective action to price oil in other currencies such as the euro, instead of the US currency which is used across the world at present.The two countries had asserted their interest to convert their cash reserves into a currency other than the depreciating U.S. dollar, which they insisted is the cause of the escalating crude oil price.Specifically, leaders of the two prominent member countries, President Mahmoud Ahmadinejad of Iran and President Hugo Chavez of Venezuela , who blamed the weakness of the U.S. dollar for high oil prices sought to trade oil in a basket of currencies to replace the historic link to the dollar.Although Iran and Venezuela have antagonistic relationships with the U.S. , which suggested that their proposals may have a political motivation, the Iranian leader’s comments were believed to have been fueled after U.S. ally Saudi Arabia was reluctant to mention concerns about the falling dollar in the summit's final declaration.Ahmadinejad’s comments also highlighted the growing challenge that Saudi Arabia , the world's largest oil producer, faces from Iran and its ally Venezuela within the OPEC."They get our oil and give us a worthless piece of paper," Ahmadinejad told reporters at the end of the summit, even as he blamed President George Bush's policies for the decline of the dollar and its negative effect on other countries.“Oil is priced in U.S. dollars on the world market, and the currency's depreciation has concerned oil producers because it has contributed to rising crude prices and has eroded the value of their dollar reserves. . The call was however resisted by OPEC which declared that it would continue to supply the world with "economic and reliable oil” notwithstanding the pressure on it to become a more active geopolitical and financial organization.
