posted on Mar, 1 2006 @ 07:03 AM
This month - March 2006 - Iran will open its new oil bourse - see link:
This item has not been reported by any of the major news agencies, or discussed in mainstream financial journals.
The reason that this is important is that the Iranian Oil Bourse will be trading oil and gas in Euro Dollars and not in US Dollars. This will
effectivley break the US dollars monopoly on oil trading and will open the way for other markets - such as Brent/Norway oil - to trade in Euros.
Why is this significant
At present anyone wanting to buy oil from the London IPE and New Your NYMEX has to pay in US Dollars for the oil/gas they purchase. These dollars are
gained by selling goods and services to the US.
During the Carter Administration the US removed the Dollar from the Gold Standard. This means that the US treasury can print as much money as they
need to pay for services and goods. Trading in Euros for oil will remove the need to hold US Dollars as a reserve currency, a possible result of this
is the countries currently holding massive reserves - like China - could flood the money back on to the market. The nightmare scenario for the US
treasurey would be a drop in value of up to 40% for the dollar. They would then be faced with the dilema of devaluing the currency or creating hyper
What is the likley hood of this happening?
The simple answer is slim. The establishment of an oil bourse and the confidence of the market to attract enough Buyers and Sellers to create the
depth of market needed to destabilise the US dollar needs more than just the opening of the market. The technology used to deliver it needs to be
proven, the reputation of trust in the bourse needs to spread. One inhibiting factor is the fact that the history of oil trading - on which all future
markets are based - is expressed in terms of US Dollars, making it difficult for buyers or sellers to asses the correct price for Euros.
What does this have to do with the war on terror?
As everyone knows the war on terror is linked to oil, as this is the one factor that makes the Middle East an important region to the West. During
2003 shortly before the US lead invasion (and subsequent occupation of) Iraq, Saddam Hussein's regime had announced it was to start trading in Euro
Dolars only for its Oil for Aid allowance.
The question of how worried is the Bush Administration at the opening of the Iranian Oil Bourse is one that needs answering.
The story is conspicous by its absence from the news channels and papers in the west, Especially during a time when Iran is being threatned with
sanctions and worse.
mod edit to shorten link
[edit on 1-3-2006 by DontTreadOnMe]