Venezuela Backs Plan to Sell Oil in Euros

Venezuela supports the idea of selling oil in euros instead of U.S. dollars, a proposal also supported by fellow OPEC member Iran, the country's oil minister said.

"Iran has an initiative that we support. They are going to start to do oil transactions in euros," Oil Minister Rafael Ramirez said Thursday in an interview with state television.

Selling oil in euros would in theory boost world demand for the European currency at the expense of the dollar.

Analysts have said the proposal is highly unlikely to materialize but could in theory have serious consequences for the U.S. economy by undermining the value of the dollar and diminishing its status as the currency used in central-bank reserves.

Venezuelan President Hugo Chavez is one of the U.S. government's most vocal critics on the world stage.

"If a market in euros is created, with the euro as a reference, we could send our supplies so they are sold under this (currency)," added Ramirez, who is also the president of the state oil company Petroleos de Venezuela SA.

Ramirez spoke ahead of a meeting of the Organization of Petroleum Exporting Countries in Caracas.

OPEC president Edmund Daukoru said afterward that while some member countries have raised the possibility, "they have not formally tabled" the proposal yet to the group.

Earlier this month, Iran's oil ministry granted a license for the creation of a euro-denominated market, an idea first floated back in 2004, though just who would trade on it remains unclear.

If Iran or Venezuela were to demand payment for oil in euros, commodities experts have said it could lead central bankers around the world to convert some dollar reserves into euros, possibly causing a decline in the dollar's value.

Oil is currently denominated in dollars around the globe, through direct sales between producers and consumers or in trades made on markets in New York and London.