Posted on 04/05/2014 6:51:12 AM PDT by Rusty0604
On the heels of Russia's potential "holy grail" gas deal with China, the news of a Russia-Iran oil "barter" deal, it appears the US is starting to get very concerned about its almighty Petrodollar
•*U.S. HAS WARNED RUSSIA, IRAN AGAINST POSSIBLE OIL BARTER DEAL •*U.S. SAYS ANY SUCH DEAL WOULD TRIGGER SANCTIONS •*U.S. HAS CONVEYED CONCERNS TO IRANIAN GOVT THROUGH ALL CHANNELS We suspect these sanctions would have more teeth than some travel bans, but, as we noted previously, it is just as likely to be another epic geopolitical debacle resulting from what was originally intended to be a demonstration of strength and instead is rapidly turning out into a terminal confirmation of weakness.
As we explained earlier in the week,
Russia seems perfectly happy to telegraph that it is just as willing to use barter (and "heaven forbid" gold) and shortly other "regional" currencies, as it is to use the US Dollar, hardly the intended outcome of the western blocakde, which appears to have just backfired and further impacted the untouchable status of the Petrodollar.
...
"If Washington can't stop this deal, it could serve as a signal to other countries that the United States won't risk major diplomatic disputes at the expense of the sanctions regime,"
And here is Voice of Russia, "Russia prepares to attack the Petrodollar":
The US dollar's position as the base currency for global energy trading gives the US a number of unfair advantages. It seems that Moscow is ready to take those advantages away.
The existence of “petrodollars” is one of the pillars of America's economic might because it creates a significant external demand for American currency, allowing the US to accumulate enormous debts without defaulting. If a Japanese buyer want to buy a barrel of Saudi oil, he has to pay in dollars even if no American oil company ever touches the said barrel. Dollar has held a dominant position in global trading for such a long time that even Gazprom's natural gas contracts for Europe are priced and paid for in US dollars. Until recently, a significant part of EU-China trade had been priced in dollars.
Lately, China has led the BRICS efforts to dislodge the dollar from its position as the main global currency, but the “sanctions war” between Washington and Moscow gave an impetus to the long-awaited scheme to launch the petroruble and switch all Russian energy exports away from the US currency .
The main supporters of this plan are Sergey Glaziev, the economic aide of the Russian President and Igor Sechin, the CEO of Rosneft, the biggest Russian oil company and a close ally of Vladimir Putin. Both have been very vocal in their quest to replace the dollar with the Russian ruble. Now, several top Russian officials are pushing the plan forward.
First, it was the Minister of Economy, Alexei Ulyukaev who told Russia 24 news channel that the Russian energy companies must should ditch the dollar. “ They must be braver in signing contracts in rubles and the currencies of partner-countries, ” he said.
Then, on March 2, Andrei Kostin, the CEO of state-owned VTB bank, told the press that Gazprom, Rosneft and Rosoboronexport, state company specialized in weapon exports, can start trading in rubles. “ I've spoken to Gazprom, to Rosneft and Rosoboronexport management and they don't mind switching their exports to rubles. They only need a mechanism to do that ”, Kostin told the attendees of the annual Russian Bank Association meeting.
Judging by the statement made at the same meeting by Valentina Matviyenko, the speaker of Russia's upper house of parliament, it is safe to assume that no resources will be spared to create such a mechanism. “ Some ‘hot headed' decision-makers have already forgotten that the global economic crisis of 2008 - which is still taking its toll on the world - started with a collapse of certain credit institutions in the US, Great Britain and other countries. This is why we believe that any hostile financial actions are a double-edged sword and even the slightest error will send the boomerang back to the aborigines,” she said.
It seems that Moscow has decided who will be in charge of the “boomerang”. Igor Sechin, the CEO of Rosneft, has been nominated to chair the board of directors of Saint-Petersburg Commodity Exchange, a specialized commodity exchange. In October 2013, speaking at the World Energy Congress in Korea, Sechin called for a "global mechanism to trade natural gas" and went on suggesting that " it was advisable to create an international exchange for the participating countries, where transactions could be registered with the use of regional currencies ". Now, one of the most influential leaders of the global energy trading community has the perfect instrument to make this plan a reality. A Russian commodity exchange where reference prices for Russian oil and natural gas will be set in rubles instead of dollars will be a strong blow to the petrodollar.
Rosneft has recently signed a series of big contracts for oil exports to China and is close to signing a “jumbo deal” with Indian companies. In both deals, there are no US dollars involved. Reuters reports, that Russia is close to entering a goods-for-oil swap transaction with Iran that will give Rosneft around 500,000 barrels of Iranian oil per day to sell in the global market. The White House and the russophobes in the Senate are livid and are trying to block the transaction because it opens up some very serious and nasty scenarios for the petrodollar. If Sechin decides to sell this Iranian oil for rubles, through a Russian exchange, such move will boost the chances of the “petroruble” and will hurt the petrodollar.
It can be said that the US sanctions have opened a Pandora's box of troubles for the American currency. The Russian retaliation will surely be unpleasant for Washington, but what happens if other oil producers and consumers decide to follow the example set by Russia? During the last month, China opened two centers to process yuan-denominated trade flows, one in London and one in Frankfurt. Are the Chinese preparing a similar move against the greenback? We'll soon find out.
Finally, those curious what may happen next, only not to Iran but to Russia, are encouraged to read "From Petrodollar To Petrogold: The US Is Now Trying To Cut Off Iran's Access To Gold."
As in all things economic....Adapt or Die. The global economic landscape is changing, and the US better be ready to deal with it.
The biggest dipsheet? I thought he was the biggest sheepdip.
Once more, the shallow thinking of the Marxist elitists comes back to undermine them. Obama’s war on energy is turning out to be the chief means of making him the laughingstock of the entire world. If he and the other clowns in power had an aggressive energy development policy, they would now be dealing from a position of strength that would make the Russians and Chinese pause. Obama and his crew like being Bossy. Their own policies have ended up only making them sound bitchy. In this final phase of his Presidency, Obama is suffering from PMS (Putin Menstrual Syndrome). And Putin is loving it. As SNL pointed out, Putin comes from Warrior Jeans, Obama wears Mom Jeans.
Well hell, Obama started it when he was talking about stinkburger.
There’s something else that’s giving the House of Saud nightmares. Every other nation is looking at fracking and wondering, “If they can do it in the United States with such spectacular results, why can’t we?”
......”A Russian commodity exchange where reference prices for Russian oil and natural gas will be set in rubles instead of dollars will be a strong blow to the petrodollar......
Rosneft has recently signed a series of big contracts for oil exports to China and is close to signing a “jumbo deal” with Indian companies..... In both deals, there are no US dollars involved”.......
Russia seeks over $11 billion in ‘debt’ from Ukraine.....Gazprom is also seeking immediate payment for all recent gas deliveries to Ukraine, valued at over $2.2 billion.
Additional news is Russia is going to the Rubal backed by gold....??? That will change many equations!
The more the merrier! Need I say it? FRACK the Saudis!
Give them the mother of all FRACKS!
It’s all going to eventually lead to war in the future. They cannot continue at the trajectory the nation powers are moving without it coming to this.
Pretty amazing that one President and the EU/NATO has completely upset the entire International stage as they have..and very quickly.
With Obama’s hands ... created divisions in our Congress and Country.... but has exported his divisions on the International Stage by not having any foreign policy nor understanding how nations work....he doesn’t care...his vision is taking the USA along side the EU/Nato trajectory and has handed us over to the EU/Nato agenda for Global Dominance.....while they allow him to sit at the head of the table as if he’s still significant in order to continue to gain the revenues from our country to the IMF and World Bank..
We are not going to hurt Russia’s LNG exports.
We don’t have the capacity or the infrastructure to do that, nor do we have a way to force other countries to buy from us unless we say we are going to bomb you if you don’t buy from us
Europe is paying three times the price of natural gas in the US. Russia is using that huge profit to fund 50% of its federal budget. There would be no force involved on our part. It’s simply supply and demand. To the extent we can supply LNG reliably, which the Russians haven’t always done, we enable the Europeans to avoid Russian gouging. We have current LNG export facilities under construction. Others are waiting on permits. Russia just doubled the price of gas to Ukraine. Is that something you approve of?
What’s not to like about letting the market place cut down on terrorism and restrict cash that the Russians need for their adventures?
If Russia and China succeed in dethroning the US Dollar as the #1 reserve currency your standard of living will drop by 50%. I suppose you don't mind this.
Of course I don’ want my standard of living to drop. But what is the end game? FORCING other countries to use the USD?
How far would we go to enforce this?
Russia should be able to charge whatever the market will bear for their gas. Why isn’t this free market concept valid for them as well as us?
If the Europeans don’t like the price, they should have done something before now to be more energy independent.
Yes and yes!
Ask yourself what Putin would do in a similar situation
When it comes to world power as in geo-politics, if you cannot/will not wield power in your self interest there are other players who will be happy to do so, to take up the slack
All your libertarian notions are fine within our borders where rule of law is decent. Outside our borders they turn to self-destructive sh_t when it comes to engaging other nations in trade and commerce
How far would you go to force other countries to use the USD?
If we don’t do it someone else will....... so pick your poison. Power abhors a vacuum. So it might as well be us that is powerful and forces nations. If not us, others will. China, Russia etc Iran...use your imagination.
I live in the US and I root for the US. I am not a citizen of the world. I am not pro-Russia. I am pro-American power
What would you do? You still won’t answer that question.
No serious analyst believes any such thing. Anyone saying $20 a barrel is a charlatan of some kind.
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