Will Iran establish a euro-based crude oil marker?!...

[Petrodollar Warfare]

Well, this was an interesting find. For those who have followed my Iraq war/dollar/euro/oil/OPEC essay, here's a quick note. The US dollar, despite serious structual imbalances, is able to keep its hegemonic/supremacy role in large part because all 3 international traded "crude oil markers" are denominated in US dollars.

The 3 oil pricing markers are: West Texas Crude Intermediate (WTI - traded on the New York Mercantile Exchange, or NYMEX), Norway's Brent Crude (traded on London's International Petroleum Exchange, or IPE), and Dubai's crude oil marker (used to price oil fot the Asian markets). The last marker is the one with problems: "Dubai and Oman pricing is based more on the physical trades of Dubai and Oman but due to falling production levels questions are being raised about the appropriateness of Dubai as a marker crude."

So, according to the below article, Iran is setting up its own international oil exchange market in 2005. Given that Iran already accepts euros for their oil exports, has no trade relationship with the US (since 1979, they can not acquire US dollars through direct trade relationships with the US) - I would assume that any such new crude oil exchagne market will be euro-based given Iran's transfer 2 years ago to the euro as their central banks's primary reserve currency...(along with last year's request that ASEAN countries pay their oil bill in euros, not dollars...)

In essence, setting up a euro-based pricing mechanism/international exchange market would remove one - if not *the* - main "techincal obstacle" that some members of OPEC have suggested is one of reasons why a "petroeuro" arrangement is difficult to implement. I should also note that since mid-2003 Iran's oil sales to the EU (such as Italy) have been priced in dollars, but the payments have been invoiced in euros, making the transactions a bit more complex than if oil prices were also denominated in euros. It seems Iran is trying to remove that final "technical obstacle"...

As an aside, in my essay, I suggested that Russia *could* ultimately create a 4th oil crude marker denominated in the euro currency, but this move by Iran makes more sense given they have larger oil reserves, and will not suffer economically from cutting their ties to the dollar (Iran has *no* ties to the dollar). Moreover, as of May 2004 the EU enlarged to 22 nations and now imports the majority of OPEC oil exports, and 45% of Middle Eastern trade comes from the EU zone, so from a monetary/economic perspective, this makes sense for Iran. Will this new exchange market work? Only time will tell...but I have long suspected something like this could occur.

Well folks, I would keep an eye on this Iranian development, and please note the final sentence in this thread...can anyone say "regime change" for Iran if the neocons stay in power after November? Good, I knew you could. It won't be "shock and awe" due to Iran's military capability and strategic position in the Gulf, but perhaps a deja vu' covert operation - circa 1953? Such an attempt would be a profound mistake, but obviously the neocons have no appreciation for history...only bizarre dreams of global empire.

Me thinks we are witnessing the slow but imminent end of US dollar hegemony...just as I predicted 1.5 years ago in my pre-war essay on Iraq. I would like to take this moment and personally thank George W. Bush and all his neocon Imperialist friends, as you and your fascist manifesto, the 'Project for a New American Century' have united the world against the us(!) More specifically, you and the unilateral warmongering neocons have exascerbated what should have been a gradual movement away from the dollar towards the euro - to an increasingly likely abandonment of the dollar standard due to current geopolitcal tensions over Iraq, thanks George(!)

We live in interesting times...

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'Iran takes on west's control of oil trading'

Terry Macalister
Wednesday June 16, 2004
http://www.guardian.co.uk/business/story/0,3604,1239644,00.html

"Iran is to launch an oil trading market for Middle East and Opec producers that could threaten the supremacy of London's International Petroleum Exchange.

A contract to design and establish a new platform for crude, natural gas and petrochemical trades is expected to be signed with an international consortium within days.

Top oil producing countries are determined to seize more control of trading after being advised that existing markets such as the IPE and Nymex in New York are not working in their favour."

<<snippet of a REAL understatement..>>>

"Some industry experts have warned the Iranians and other Opec producers that western exchanges are controlled by big financial and oil corporations, which have a vested interest in market volatility."