I dont know that europeans want oil priced in euros. It would result in a very strong euro that would destroy german export industries.
Euro would be the numeraire only. That wouldn't increase net demand for the Euro. Think about the other end of the transaction on purchase.
Are you saying the euro wouldnt strengthen, if oil was priced in euros?
It wouldn't materially change the equillibrium in FX markets. Short-term you would almost certainly see sentiment induced volatility (or volatility attributed to it), but it would not, in itself, change the supply/demand balance for USD which is governed by capital and trade flows themeselve, not the currencies in which they are priced.
Imagine you (in Ireland) are selling stuff on eBay and you knwo that for convience sake most of your potential buyers like to transact in USD. YOu quote in USD, take the USD from the buyer (who has them in her bank account). You then sell these, to deposite Euros into your account (or buys Euro bonds or whatever it is you like doing).
Now imagine that you get the hump and decide from now on you will only quote and transact in EUR. You buyers still want the stuff, but now need to take USD from their account and sell it (this is the bit most people are focusing on). But then what happens? You take the EUR from the buyer and put it into you bank account or buy Euro bonds as you like to do. That's it. You are no longer selling any USD as you were before.
So although the buyer now has to sell USD to transact in the new numeraire, you are no longer selling USD on the other end of the transaction.
Net effect - nil.
So the change in the currency under which prices are quoted or transacted doesn't have any real effect in itself. It is just a numeraire.