Is this month’s “all new tenders for export oil products supplies will have the euro as the payment currency” a game changer?
There has been talk of de-dollarization for some time, but de-dollarization is now picking-up speed by the month.
Earlier this month of August, 2019, buyers were notified about switching from dollars to euros for payment of Rosneft oil contracts.
MOSCOW (Reuters) – Russia’s Rosneft (ROSN.MM), one of the world’s top oil producers and exporters, has notified customers that future tender contracts for oil products will be denominated in euros not dollars, five trading sources told Reuters.
Why is this being done?
As one could imagine, the US Treasury Department’s weaponization of the US dollar through US sanctions plays a large role in the change of payment currencies from dollars to euros.
In fact, searching the sanctions list at the Office of Foreign Assets Control under the US Department of Treasury returns 500+ results when searching Russia, and several results when searching specifically for Rosneft.
More on the main reason for the switch, from Reuters:
Traders said they believed Rosneft’s latest move was intended to protect the Russian company in case new and unpredictable sanctions are imposed on it by the United States.
Rosneft contacted buyers about switching from dollars to euros in early August.
“All new tenders for export oil products supplies will have the euro as the payment currency,” one of the five sources said, confirming what the other sources said.
Before one is quick to dismiss this as simply a minor development in the world today, consider what is posted on the “about” page of Rosneft’s website (bold added for emphasis):
Rosneft is the leader of Russia’s petroleum industry and the world’s largest publicly traded petroleum company. Company’s main activities include prospecting and exploration of hydrocarbon deposits, oil, gas and gas-condensate production, upstream offshore projects, processing, as well as oil, gas, and product marketing in Russia and abroad.
In other words, Rosneft is no small potatoes when it comes to the life-blood of any economy, oil.
People talk about a coming US dollar “shortage” which will boost the value of the dollar.
But examples like these speak to the contrary, meaning an excess of dollars.
Trump may not have to use the ESF to weaken the US dollar.
Many companies seem to be doing it on their own.
Rejecting the US dollar altogether.
– Half Dollar