Could OPEC drop dollar for euro?

KUWAIT: Could oil producing countries drop the dollar for a more stable currency? Iran’s recent announcement that it would stop using the dollar in its oil transactions made that question a plausible scenario for other oil producers to follow with a weakening US economy and a declining dollar. The depreciating US currency worries oil exporting countries as it means a reduction in the value of their dollar reserves and a loss in revenues with the spiraling oil prices. So could Iran’s decision signal a trend for other oil producing countries to follow?

Iran, the world’s fourth largest oil exporter, is urging other members in the Organization of the Petroleum Exporting Countries (OPEC) to also drop the greenback as it is too unreliable. The oil-rich country, argued last month at the OPEC oil ministers meeting, that oil producers are losing revenues because the dollar is performing poorly against the euro. Tehran is pushing OPEC to drop pricing oil in dollars and shift to a basket of currencies, though Saudi Arabia clearly is opposing the notion. Saudi foreign minister warned that talking publicly about the dollar’s decline could hurt its value even further.


Iran receives non-dollar currencies for 85 percent of its oil products and is already asking its customers to pay in euro or yen. Recently, the Islamic Republic requested that its shipments to Japan be traded for yen instead of dollars. On December 8, Iran’s oil minister said that the major crude producer has completely stopped carrying out its oil transactions in dollar.

As OPEC controls only 40 percent of world’s oil production, is it possible for other non-OPEC countries to follow Iran’s suit and drop the dollar from its oil deals?

Yes, other oil producing countries can always follow Iran and drop the dollar from oil deals – Iraq had done this before the US invasion. Venezuela has talked about this possibility for some time. Russia has also considered such a move,” Professor Robert Looney of the National Security Affairs Department at the Naval Postgraduate School in California, told Kuwait Times via email. “On the other hand, there are no clear benefits in doing this – certainly in the short run. Dollars can be easily converted
into other currencies and investments made where the rate of return is highest,” he added.

Kuwait Times