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IPFS News Link • Oil

After Russia, Iran to sell oil in its local currency instead of US dollars

•, By Shahid Faridi

Iran may soon follow the Russian example and start selling oil and gas in its currency, rial, instead of US dollars. The rial is likely to be bound to gold, just like the Russian rouble. Sources said Iran may soon announce an attractive rial-gold exchange rate, which would incentivise purchase of oil and gas in rial or gold.

The Iranian decision will deal yet another big blow to the US dollar, which has been the preferred currency for international trade. Late last month, Russia had decided to sell oil and gas in rouble or gold. The Central Bank of Russia had announced that the Russian rouble is bound to gold as of March 28, 2022.

The rate announced by the bank is 5,000 rouble for one gram of gold. This is much lower in rouble than its value in dollars. Iran, too, is reportedly working on pegging the rial-gold exchange rate lower than the dollar-to-gold rate. Iran has started sounding its big buyers about the decision. India is one such buyer. Iran had replaced Saudi Arabia as India's biggest oil supplier before former US President Donald Trump pulled out of the Obama-era deal and imposed sanctions on Iran. 

Iran is keen to revive the rupee-rial trade deal with India. It has been in touch with the government of India. Sources said the Indian government was not averse to such a deal. "India is weighing the pros and cons. A rupee-rial deal would yield huge monetary benefits. But we have to also think about the US reaction. It is already seething with anger over our deal with Russia," a government source said. According to reports, Russia has offered about a 25% discount on oil prices, and Iran may offer a similar discount.