Insider shocked America: Europe will kick off the US dollar in oil trade with Iran.

The European Union plans to transfer payments to the euro to buy oil from Iran, removing transactions in US dollars, a diplomatic source told RIA Novosti

Bruxelles is currently in great disagreement with Washington for withdrawing the US from Iran's nuclear deal, which was reached during Barack Obama's administration.President Donald Trump promised to impose sanctions against the Islamic Republic and against European companies that deal with Iran.

"I am deluded by the information that the EU will turn from dollar to euro in crude oil trade from Iran," he told the insider agency. Earlier this week, European Union foreign policy chief Federica Mogherini said foreign ministers of Great Britain, France, Germany and Iran agreed to prepare practical solutions in response to Washington's step in the next few weeks. These countries are reportedly planning to maintain and deepen economic ties with Iran, including in the oil and gas supply sector.

Mogherini stressed that the parties should work together to abolish the sanctions as an integral part of the historic nuclear agreement. "We are not naive and we know it will be difficult for all sides." The Iranian nuclear agreement, known as the Joint Comprehensive Action Plan (JCPOA), was sealed three years ago in Vienna between Tehran and the P5 + 1 group (China, France, Britain, the United States, plus Germany). The agreement has removed a decade-long international sanction in exchange for Iran to reduce its controversial nuclear program. On January 16, 2016, contracting parties announced the beginning of its implementation.

The abolition of international sanctions for the first time allowed Iran to access world markets in almost four decades. Since then, Tehran has managed to significantly increase the export of crude oil. However, oil is tied to the US dollar in international markets, which makes it difficult for Iranian partners to pay off crude oil and Tehran to receive them. As the dollar plays a leading role in international financial markets, again imposing sanctions would mean Iran's emergence from the global financial system.

At the same time, dozens of signed contracts between European companies and Iran could be at risk of cancellation if Bruxelles respects Washington's sanctions. This would damage the Iranian economy and European companies would lose a large market in the Middle East. Switching to alternative settlement arrangements allows both parties to continue trading despite US sanctions.

• 17 May, 2018
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