Petrodollar Warfare: Dollars, Euros and the Upcoming Iranian Oil Bourse

[Clara T]

Petrodollar Warfare: Dollars, Euros and the Upcoming Iranian Oil Bourse
by William Clark


“This notion that the United States is getting ready to attack Iran is simply ridiculous...Having said that, all options are on the table.”
– President George W. Bush, February 2005

The proposed Iranian oil bourse signifies that without some sort of US intervention, the euro is going to establish a firm foothold in the international oil trade. Given U.S. debt levels and the stated neoconservative project of U.S. global domination, Tehran’s objective constitutes an obvious encroachment on dollar supremacy in the crucial international oil market.

The macroeconomic implications of a successful Iranian bourse are noteworthy. Considering that in mid-2003 Iran switched its oil payments from E.U. and ACU customers to the euro, and thus it is logical to assume the proposed Iranian bourse will usher in a fourth crude oil marker – denominated in the euro currency. This event would remove the main technical obstacle for a broad-based petroeuro system for international oil trades. From a purely economic and monetary perspective, a petroeuro system is a logical development given that the European Union imports more oil from OPEC producers than does the U.S., and the E.U. accounted for 45% of exports sold to the Middle East. (Following the May 2004 enlargement, this percentage likely increased).

Despite the complete absence of coverage from the five U.S. corporate media conglomerates, these foreign news stories suggest one of the Federal Reserve’s nightmares may begin to unfold in the spring of 2006, when it appears that international buyers will have a choice of buying a barrel of oil for $60 dollars on the NYMEX and IPE - or purchase a barrel of oil for €45 - €50 euros via the Iranian Bourse. This assumes the euro maintains its current 20-25% appreciated value relative to the dollar – and assumes that some sort of US "intervention" is not launched against Iran.

The upcoming bourse will introduce petrodollar versus petroeuro currency hedging, and fundamentally new dynamics to the biggest market in the world - global oil and gas trades. In essence, the U.S. will no longer be able to effortlessly expand its debt-financing via issuance of U.S. Treasury bills, and the dollar’s international demand/liquidity value will fall.

http://usa.mediamonitors.net/content/view/full/174...

[lovuian]

1. I agree this is the BIG Story... Oil is going to go UP UP UP!!!

and though Bush has tryed to stop it ... Its not going to happen!!!

[HysteryDiagnosis]

2. If the Iraqis realize just what Bremer did with his illegal rules, and

once they tally the dead... they may once again decide to switch to the Euro... and we'll have to shock and awe them all over again. Damn.

[Turbineguy]

3. Switching to Euros

was Saddam Hussein's unpardonable sin.

[Flabbergasted]

4. What's the current exchange rate?

45-50 euros would be how many dollars?

[Clara T]

6. Here

$1 is worth...
0.8261 Euro
http://ichart.finance.yahoo.com/t?s=USDEUR=X

[EuroObserver]

5. Better link here?

http://usa.mediamonitors.net/headlines/petrodollar_warfare_dollars_euros_and_the_upcoming_iranian_oil_bourse

[teryang]

7. Pipleline politics

Large Iranian Chinese oil and gas projects and exports denominated in Euros?

This will undoubtedly have a downward effect on the dollar. An ability to define the terms of economic exchange is in fact a demonstration of sovereignty and control over markets. This is something the current group of carpetbagging Rhodesian adventurers can't stomach.

Iran is a big chip in Eurasian power politics. An attack on Iran will not be taken lightly by Russia or China.