DUBAI, Aug 19: US scrutiny of global banking since September 11 has spooked Iran into mulling a switch from US dollars to euros for crude oil sales, its primary revenue earner, oil industry sources said on Monday.

Iran, branded by Washington as part of an “axis of evil” seeking weapons of mass destruction, could deal a psychological blow against the struggling US dollar if it forces customers to pay billions of euro every year for their oil imports.

“As a precaution, the Central Bank of Iran is looking into a switch away from US dollar payments — with the euro a favoured alternative,” said an Iranian oil industry source.

“The United States is keen to know who is sending and receiving dollars and they may make it difficult to transfer our money, especially when they know it is for Iran,” said an Iranian industry source.

Iran’s Central Bank has yet to issue a final decision on whether to drop the US greenback, the international currency of oil, for its exports. A committee of experts is mulling the move.

A rough calculation shows Iran has earned at least $10 billion so far this year from crude exports, with oil revenues providing 80 percent of its foreign income.

Revenue from Iran’s daily crude sales of just under two million barrels eventually returns to the Central Bank. But along the way, the money is transferred through a series of intermediary banks, mostly European.

International bankers said all transactions involving large amounts of US dollars are cleared through master accounts held in New York. And the New York Federal Reserve has access to information about such transfers, they said.

“After September 11, the US authorities were chasing terrorist funds and they were questioning a lot of things,” said a senior banker. “There were many wild goose chases.”

Iranian sources said their banking colleagues have felt particularly hassled during the past several months, as Washington heats up its war of words on Tehran.

This has encouraged Tehran to speed the pace of an ongoing debate to abandon the US dollar as payment for oil sales.

The sliding US dollar has also played a part in Iran’s potential switch to the euro, Iranian sources said. The dollar index — which measures the greenback’s performance against a basket of major currencies — has fallen almost nine percent this year on investor concerns over the strength of the US economic recovery and the sustainability of its large current account deficit.

If Iran were to shift to euro payment, it would follow the lead set by fellow Gulf producer Iraq — also part of Washington’s “axis of evil”. Since late 2000, Baghdad has insisted its customers pay for its oil in euros.

But switching away from the US dollar to the euro will not be easy — especially since the US dollar is used to assess and settle contract prices for crude oil.—Reuters