The European Union is looking favorably at a proposal by Germany’s Foreign Minister Heiko Maas to set a SWIFT-like payment system between the union and Iran as a way of avoiding U.S. sanctions, Sputnik reports, quoting a source from the EU.

“Various ideas [on the matter] are being voiced, and at present, one can say that it is an important contribution in terms of efforts to secure the Iran nuclear deal,” the source, who was not named, said. Whether or not Maas’ proposal will be discussed officially by EU officials remains to be seen.

Europe is among Iran’s top oil destinations and has demonstrated its eagerness to keep the nuclear deal and continue buying Iranian crude. Earlier this year, after President Trump pulled the United States out of the deal, the EU enacted a blocking mechanism from the 1990s that will effectively oblige European companies doing business in Iran to not comply with the U.S. sanctions. The EU also granted the European Investment Bank an external lending mandate to protect these European companies.

Despite these EU assurances that European companies could continue doing business as usual with Iran, European refiners began reducing their intake of Iranian oil pretty much as soon as Trump announced the U.S. pullout of the nuclear deal in May. At the time, Reuters quoted an Italian refiner as saying, “It is not clear yet what the U.S. administration can do but in practice we can get into trouble.”

Reuters also quoted sources from the industry as saying that all the large European refiners from Eni and Total to Repsol and Cepsa, were preparing to stop buying oil from Iran. Total later pulled out of the South Pars gas project in Iran. This means that the French company is at risk for punitive action from the EU, which makes the whole situation begin to look like the theater of the absurd.

By Irina Slav for Oilprice.com

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