Russian president Vladimir Putin told reporters at a news conference during a visit by German chancellor Gerhard Schröder, “We do not rule out that it is possible. That would be interesting for our European partners.”

The Russian central bank has been amassing euros since early last year, increasing the share of its foreign reserves held in the currency from 10 percent to 25 percent. Moscow’s total reserves have reached $65 billion on the strength of the country’s oil exports. The amount of deposits held in private bank accounts in Russia has quadrupled.

Worldwide, two-thirds of central banks’ foreign reserves are held in dollars, compared with 13 percent in euros; two-thirds of world trade is denominated in dollars.

Backed by Washington’s economic and military power, the dollar dominates trade in oil to an even greater extent. Buyers pay in dollars, and oil exporting countries hold their reserves in the same currency.

The Iranian government, the fifth-largest oil exporter, has speculated that it may also use the euro in trading with Europe. Javad Yarjani, a senior official in the Iranian oil ministry, said last year, “It is quite possible that as bilateral trade increases between the Middle East and the Europe Union, it could be feasible to price oil in euros.”

U.S. and European oil companies are competing for a piece of Russian energy resources. London’s Telegraph reported that ExxonMobil has offered $25 billion for a 40 percent share in the Russian oil company YukosSibneft, and that ChevronTexaco is seeking a smaller share.

British Petroleum has offered $2.7 billion in a merger with the Russian company TNK, while the rival Royal Dutch/Shell is expected to invest $10 billion in the Sakhalin 2 oil field.  
 
 
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