Technical Analysis - Thursday, May 28, 2009 13:05 - 0 Comments

Trading Oil In Euro

Trading oil in Euro is a recent and gradually evolving phenomenon. This trend can lead to the evolution of ‘petroeuro’ as the new currency for oil trading. However, experts consider trading oil in Euro as a potential threat to the valuation of the US dollar.

Countries That Allow Trading Oil in Euro
Although an internal agreement requires OPEC member nations to conduct oil trade in US dollars, several deviations have caught media attention over the past decade. In an April 2008 Reuters report, Hojjatollah Ghanimifard (Director of International Affairs at the National Iranian Oil Company) confirmed that “all of Iran’s oil trading is being done with Euro and Yen.” Earlier, in 2000, Iraq began conducting trading oil in Euro. As of May 2009, OPEC nations continue to trade in US dollars, but speculations believe that a shift to Euro is around the corner.

One of the largest producers of oil, Russia, has also revealed plans to trade oil in Euro. The stock exchanges at New York, Dubai and Singapore have recognized Euro for trading oil.

Controversy Surrounding Trading Oil in Euro
On May 5, 2008, the world’s fifth oil stock exchange began operations in Iran, opening a Pandora’s box of acquisitions and speculations. As a result of controversies with the US, Iran promoted trading oil in Euro to do away with the US dollar supremacy.

The “dollarisation” of the oil economy prompts consumer nations to save in US dollars to fund oil imports. As the concept of trading oil in Euro gets strengthened, nations would have the choice of managing national savings in Euros or US dollars. Thus, the overall supremacy of the US dollar could suffer a serious setback with oil trading in Euro.

Find out more information on trading oil.