Neftegaz.RU. The largest Russian oil producer Rosneft, told customers earlier this month that oil product sales in tender contracts will be priced in euros instead of U.S. dollars, Reuters reported on August 21, citing 5 trading sources.
Rosneft’s move is seen by traders and analysts as a future hedge against potential new U.S. sanctions on Russia and/or its oil industry.
Rosneft has been on a list of sanctioned entities of the U.S. Department of the Treasury since 2014, when the U.S. and the EU imposed sanctions on Russia and Russian companies. Those sanctions, however, don’t prohibit Rosneft accepting U.S. dollars as payments for the oil and oil product it sells.
Rosneft exports around half of the oil products its refineries in Russia produce. Most of the exported oil products are being sold via tenders to major international commodity traders or the trading units of oil majors. Trafigura, Vitol, Glencore, BP, and Cetracore are some of the top buyers of Rosneft’s oil products in annual, spot, or short-term tenders.
According to traders who spoke to Reuters, the goal of replacing the U.S. dollar with Euros in future tenders - and this switch could be made as soon as this year - is to mitigate as much as possible future unpredictable U.S. sanctions on Rosneft.