Iran is considering switching payments for its crude oil exports to Europe to the UAE dirham currency instead of the euro.

The International Oil Daily newsletter said the move looked like an attempt to blunt the impact of financial sanctions soon to be adopted by the European Union, said a report in our sister publication, the Gulf Daily News.

It quoted industry sources as saying the state National Iranian Oil Company (NIOC) had sounded out European term customers about the possible change, but had yet to make a firm decision.

'There's something happening - the Iranians are testing solutions,' it quoted one industry executive as saying. 'They've put out feelers very recently about taking payment for oil in dirhams.'

It quoted another industry source as saying the move was prompted by concerns in Tehran that euro transactions were no longer safe and could be blocked by EU member states.

'Basically, they'd be happy to get paid in any currency as long as it's not the dollar or the euro,' the source said.

New EU sanctions, which EU leaders agreed in June, are expected to be approved by the end of this month.

They will focus on trade, transport and key sectors of the gas and oil industry. Energy sector sanctions would prohibit 'new investment, technical assistance and transfers of technologies, equipment and services related to these areas.

The newsletter said the EU would also introduce restrictions against Iranian banks and target the European operations of Iran's central bank.

Although Iran's crude oil exports are priced in dollars and are likely to remain so for some time, all of its customers pay in other currencies, it said. – TradeArabia News Service