Dubai: Iran may seek payment for its oil exports to Europe in UAE dirhams rather than euros because tougher EU sanctions could block Iranian transactions in the single European currency, an Iranian official said on Sunday.
However, the UAE, a US ally and major oil exporter whose ties with Iran are already strained, is likely to resist such a change given its wish to avoid being sucked deeper into the dispute over Iran's nuclear ambitions.
"This matter of changing over to UAE dirham is under discussion among Iranian officials at the moment but has not been implemented yet," the official from the Iranian Embassy in the UAE told Reuters on condition of anonymity.
"The weak position of the euro and the dollar, in addition to the fear of blocking transactions if these currencies are used in trade, is what led Iran to consider the switch," the official said.
The dollar is the standard currency for oil trade, but Iran had switched to the euro for European deals in response to many years of US sanctions against the Islamic Republic.
Last month Europe also toughened its sanctions against Iran in a stepped-up international effort to make Tehran suspend a nuclear programme which the West suspects is secretly designed to develop atomic bombs. Iran says it seeks only civilian energy from its uranium enrichment process.
The Iranian official said talks were internal at this stage, and that Tehran had not yet broached the subject with Abu Dhabi.
UAE officials at the Central Bank, economy ministry, foreign ministry and finance ministry had no immediate comment.
