Russian oil firm Surgutneftegaz is now seeking alternatives to the US dollar as payment for transactions, in a bid to circumvent the looming economic sanctions coming from Washington. As revealed by sources who regularly deal with the oil producer, the company prefers to get paid in euros.
As an insurance against the likely implementation of US sanctions on Russia's crude production industry, Surgutneftegaz is taking the initiative to prompt buyers of its new payment scheme which will now be done in terms of euros, a report from Reuters said.
Russia has been under pressure from US sanctions for close to five years already ever since its attempt to annex Crimea. With the eyes of the White House still locked in this side of the globe, Kremlin cited threats of increased sanctions from the Trump administration.
Bells are ringing in Russia over a potential move by Trump, through the US Treasury Department, to include the country's booming oil industry in the blacklist. If this comes to pass, it could hinder Moscow's black gold to flow freely in the global oil market as well as prohibiting them from conducting transactions using US dollars. This, in turn, can cripple the entire domestic industry.
For years, the Russian oil markets have been able to evade several US sanctions. However, with these reinforced measures from the White House, Russian companies were left with no choice but to come up with new strategies to dodge the bullet once again.
In a report from Forex Crunch, one of the changes these firms have been implementing is to loan from domestic financing institutions rather than the US banks.
Moreover, Surgutneftegaz and others are now settling business transactions in Euros as a replacement for US dollars which were used beforehand.
According to the finance publication, the US has no right whatsoever to forbid any entity from using its currency. What it can do is to prevent home-grown banks from conducting business with the likes of Surgutneftegaz and other sanctioned countries like Russia or Iran.
As reported earlier on this site, the first wave of the two economic sanction policies set on Tehran includes the ban of Iran from using the USD in its global transactions.
Avoiding Future Problems
The Reuters report cited above went on to reveal the actions Surgutneftegaz are taking in light of these recent economic threats. As tipped by a number of patrons, the company has been prompting its buyers to come to an agreement of adding to their contracts the option to settle payments in euros.
A message from Surgutneftegaz sent to one of its clients reportedly said that the purpose of this new memo is for them to avoid any future problems that may arise from using USD in their transactions.
