Reuters is reporting that Iran plans to accept only the Euro when selling its oil.
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.
Why is this a big deal? Well, until we invent Earth Creds, the dollar is the closest thing the world has to a global currency. It has traditionally been used as the de facto currency when buying and selling oil. Some have argued that without this status, the US will lose its ability to run deficits by sending dollars overseas.
The IMF recently approved it as a recognised reserve currency, which may help it achieve that aim. There’s a big difference between being on a list and being the defacto currency, though. The dollar has been top dog since Bretton Woods.
Some amusingly relevant stuff from The Onion (from 6 years ago).
WASHINGTON—The U.S. economy ceased to function this week after unexpected existential remarks by Federal Reserve chairman Ben Bernanke shocked Americans into realizing that money is, in fact, just a meaningless and intangible social construct.
