RUSSIA - Don’t Pay with US Dollars, Oil Companies State

Arno Froese

Russian oil producer Surgutneftegaz is pushing buyers to agree to pay for oil in euros instead of dollars if the need arises, apparently as insurance against possible tougher U.S. sanctions, traders who deal with the firm told Reuters. 

The prospect that causes most alarm for Russian firms is inclusion on a Treasury Department blacklist that effectively cuts them off from conducting transactions in dollars, the lifeblood of the global oil industry. 

To date, Russia’s oil industry has been able to weather Western sanctions. In response to restricted access to Western finance and technology, firms have switched to borrowing from Russian state banks and developed their own technology. 

According to a message sent by Surgutneftegaz to one of its customers asking them to sign the addendum, the oil company cited the need to “avoid any possible problems with payment in USD.” Reuters has seen a copy of the message. 

Most dollar-denominated transactions pass through the U.S. banking system, and those banks, to avoid violating sanctions, can refuse to handle money linked to blacklisted companies or individuals. 

It is not clear how widely the Russian oil sector is preparing for the possibility of tougher sanctions. 

A source at Gazpromneft, Russia’s third-biggest oil company by output, said most of its contracts already contained a clause on possible payments in non-dollar currencies. 

A second source at the company said that when it is drafting supply contracts with customers for 2019, it will make sure they include a non-dollar payment option in all cases., 19 September 2018

Arno's commentary

Most experts agree: it’s a long way to detour the US dollar in international business. Nevertheless, there is movement afoot, not only in Russia but also in China and southeast Asian countries, as well as in Europe, to change from the US dollar to either the euro or a bucket currency for Russia and Asia. One thing seems sure: the domination of the US dollar in world markets should not be taken for granted in the long run. It will and must change. Will that affect the US? Experts say, most definitely! What is the reason behind it all? End the dominance of the US dollar in the world market. This, in turn, will lead to a more integrated society on the global level. In the end, the world will and must become one—albeit temporarily.

Arno Froese is the executive director of Midnight Call Ministries and editor-in-chief of the acclaimed prophetic magazines Midnight Call and News From Israel. He has authored a number of well-received books, and has sponsored many prophecy conferences in the U.S., Canada, and Israel. His extensive travels have contributed to his keen insight into Bible prophecy, as he sees it from an international perspective.

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