In an effort to promote the euro in oil and commodities trading, the European Union convened an industrial working group with the objective of looking into how to replace the US dollar in certain transactions.

The group involves executives from European energy giants, including OMV, Eni, Fluxys, and Engie; all of which are part of a group that reflects the preference of the European Commission for a market-led strategy driven by viable alternatives to the use of the US dollar.

“The EU is the world’s largest energy importer with an annual energy import bill averaging €300 billion in the last five years. Roughly 85% of this amount is paid in US dollars,” according to a statement from the organisers of the meeting.

The move follows the US’ decision to withdraw from the Iran nuclear deal and Washington’s reimposition of financial sanctions on the Islamic Republic for its continued threats against Israel as well as Tehran’s support for terrorist groups like Hezbollah and Hamas and its military backing of Syrian dictator Bashar al-Assad.

This has forced European companies to leave Iran out of fear that they would be subjected to secondary sanctions imposed by the Americans. The US dollar currently dominates the market due to higher liquidity, lower transaction costs, and its use as a benchmark in commodities and derivatives markets.

At the beginning of December 2018, the European Commission adopted the Communication “Towards a stronger international role of the euro”.

Moreover, the Commission proposed actions in key strategic sectors that include energy, raw materials, food commodities, and transport sector manufacturers, including targeted consultations of the stakeholders. The consultations will conclude in March, with a report by the Commission expected by later this summer.