ALI AKBAR DAREINI, The Associated Press
April 30, 2008 at 12:25 PM EDT
TEHRAN – Iran has stopped conducting oil transactions in U.S. dollars, an official said Wednesday, a concerted attempt to reduce reliance on Washington at a time of tension over Tehran’s nuclear program and suspected involvement in Iraq.
Iran, OPEC’s second-largest producer, has dramatically reduced dependence on the dollar during the past year in the face of increasing U.S. pressure on its financial system and the fall in the value of the American currency.
World markets price oil in U.S. dollars. Its depreciation has concerned producers because it has contributed to rising crude oil prices and has eroded the value of their dollar reserves.
“The dollar has totally been removed from Iran’s oil transactions,” Hojjatollah Ghanimifard, a top Oil Ministry official, told state-run television Wednesday. “We have agreed with all of our crude oil customers to do our transactions in non-dollar currencies.”
At a summit last year in Saudi Arabia, Iranian President Mahmoud Ahmadinejad called the depreciating dollar a “worthless piece of paper.”
Iran put pressure on other Organization of Petroleum Exporting Countries members at the meeting to price oil in a basket of currencies. But it has not been able to generate support from fellow members – many of whom, including Saudi Arabia, are staunch U.S. allies.
Iran has a tense relationship with the U.S., which has accused Tehran of using its nuclear program as a cover for weapons development and providing support to Shiite militants in Iraq who are killing American troops. Iran has denied the allegations.
Iranian oil officials have said previously that they were shifting oil sales out of the dollar into other currencies, but Mr. Ghanimifard indicated Wednesday that all of Iran’s oil transactions were now conducted in either euros or yen.
“In Europe, Iran’s oil is sold in euros, but both euros and yen are paid for Iranian crude in Asia,” he said.
Iran’s central bank also has been reducing its foreign reserves denominated in U.S. dollars, motivated by the falling value of the greenback and U.S. attempts to make it difficult for Iran to conduct dollar transactions.
U.S. banks are prohibited from conducting business directly with Iran, and many European banks have curbed their dealings with the country over the past year under pressure from Washington.
However, the U.S. has been wary of targeting Iran’s oil industry directly, apparently worried that such a move could drive up crude prices that are already near record levels.
Iranian analysts say Tehran can withstand U.S. pressure as long as it can continue its oil and gas sales, which constitute most of the country’s $80 billion in exports.