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Singapore. Big oil producing nations denied on Tuesday a British newspaper report that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the greenback with a basket of currencies in oil trades.

Oil prices rose toward $71 a barrel on Tuesday, helped by a fall in the dollar after the report. The dollar fell in Asia, hit by the prospect US interest rates will stay low for some time and the oil-trade report. It dropped to 88.86 yen in Tokyo afternoon trade, down from 89.51 yen in New York late Monday.

The report, in the Independent newspaper, revived the idea of ending a huge volume of trade of the world’s most liquid commodity — oil — in the US dollar, a potentially major sign of the greenback’s fading status.

Quoting unnamed sources, including Gulf Arab and Chinese banking sources, the paper reported that Gulf Arab states were in secret talks with Russia, China, Japan and France “to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf”.

That appeared to suggest the easier of two ways to break the oil-dollar link: ending the use of the dollar as the currency used to settle oil trades between countries or between companies, an important function but essentially a treasury operation.

A more difficult task would be to replace the currency in which oil is priced: the US dollar, the currency that underpins benchmarks from New York to Dubai to Singapore, and which would take a huge effort to change.

If the plan materializes, it could be major news for forex markets by allowing oil exporters to more easily diversify their currency reserves and remove the need for importing nations to buy dollars to pay for their oil, but would appear unlikely to revolutionise oil trade.

The notion is hardly new and has been periodically raised during the dollar’s long slide this decade, particularly with increased discussion about a shift toward a new global reserve currency.

Although an increasing share of global commodity trade is being settled between counterparties in non-dollar currencies, that is a far cry from changing the dollar-denominated markets that establish the underlying prices for those trades, even within the nine-year time frame that the paper cited.

Beyond the strong political alliances between major Gulf exporters and the United States, there are deep logistical reasons to mitigate against a major shift in the basis currency for oil trade away from the US dollar.

Despite the Gulf’s role as the swing oil supplier to the world — and China’s status as the fastest-growing consumer — the most liquid market for oil remains the New York Mercantile Exchange, followed by the London-based Brent contract.

Unless Gulf nations are prepared to remove restrictions on the free trade of their crude oil exports it will be difficult for them to influence the basis currency for global oil.

Although commodity exchanges in both Japan and China offer local currency-based oil futures, they are ultimately linked back to regional benchmarks denominated in US dollars.

China’s yuan and many Gulf currencies are not fully convertible. This is a significant obstacle to any effort to replace the dollar in global commodity pricing.

Iran has pushed for OPEC to switch from the dollar when calculating international oil prices, though it has so far received little support for the initiative.

On Tuesday, Kuwait ruled out production increases this year.

Reuters