Azerbaijan, Baku, 5 May / Trend corr. A.Badalova / Iranian decision to decission to totally remove U.S. dollars in the country's oil transactions will not prsent any serious consequeneces, foreign experts polled by Trend believe.
The representative of Iranian Petroleum Ministry stated that Iran has taken up the decission to totally remove U.S. dollars in the country's oil transactions Representative stated that transactions with the buyers will be implemented in the other non-dollar currencies. Earlier, Iranian President Mohamad Ahmadinejad proposed that it was necessary to replace the U.S. dollar with other major hard currencies in oil trading. However, the Iranian President's proposal was not supported.
Carlo Stagnaro, official from the Italian Institute of Bruno Leoni, stated that he doesn't think Iranian decision per se does really matter. Oil will still be denominated in dollars in the international markets, as it is, no matter whether Iran or a few others stop getting dollars and ask buyers to pay in euro (or other currencies). "Oil demand and supply depend on each other as well as on specific variables - spare capacity, weather conditions, etc. - not on the currency. If many other producing countries follow that decision, the US might eventually be put under pressure because of rising inflation. After all, one reason why oil prices are skyrocketing is precisely the weak dollar. I'm not saying that the weak dollar explains everything, I'm just arguing that it is one of many causes why traders today accept to pay as much as 120 US$ for a barrel of Wti, while the same amount was simply unthinkable until a few months ago. On the economic side, I don't think per se this will have particular positive or negative consequences for Iran" Stagnaro stated.
Andrew Reed, expert on oil market at the American analytical company Energy Security Analysis, stated that the traders would probably be reluctant to deal in a different currency because it would introduce currency risk to their operations. "There are very few countries that are likely to follow Iran's step and refuse to accept the dollar. I do not think that the move will have significant consequences for Iran," Reed said to Trend .
"I don?t think that even the short run impact would be significant. The ultimate impact (once adjustments had taken place) would be to reduce the exchange rate of the US$ slightly. It would initially slightly reduce the demand for and the price of Iranian oil. If no-one lese follows suit this price would permanently be reduced (by a very small amount). If this happened generally, Iran would ultimately not be hurt," Ragnar Arnason, Professor in the Economic Sciences Institute in Iceland, stated to Trend .
According to the US Energy Information Agency (EIA), Iranian oil export exceeded 4mln barrels per day in 2006. Oil demand in the internal market of the country totaled 1.68mln barrels per day in 2006. The confirmed oil reserves, according to EIA, are 132.46bln barrels in the country.
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