Iran to OPEC: Stop Oil Sales in Dollars

[RSLudlum]

AP report: source

Iran to OPEC: Stop Oil Sales in Dollars
41 minutes ago

TEHRAN, Iran (AP) — Iranian President Mahmoud Ahmadinejad is urging OPEC members to form a joint bank and stop pricing oil trades in U.S. dollars.

According to the Iranian government's Web site, Ahmadinejad told OPEC Secretary General Abdalla Salem el-Badri the cartel "should establish a joint bank as well as having joint currency."

Oil is priced in U.S. dollars on the world market, and the currency's depreciation has concerned producers because it has contributed to rising crude prices and eroded the value of their dollar reserves.

Iran has repeatedly urged OPEC members to shift sales away from dollar. But Iran's proposal to trade oil in a basket of currencies is not supported by enough OPEC members, which include staunch U.S. allies such as leading producer Saudi Arabia.

 

[icon124]

oh shit...bye bye iran

 

[Leadman584]

Digg submission here:

http://digg.com/business_finance/Iran_urges_OPEC_to_abandon_the_US_dollar

 

[sidster]

key is the last paragraph in the story:

proposal to trade oil in a basket of currencies is not supported by enough OPEC members, which include staunch U.S. allies such as leading producer Saudi Arabia

 

[constitutional]

key is the last paragraph in the story:

wow, I was about to say the exact same thing. We should not be all fired up over words.

 

[Dr.3D]

What difference does it make if it is traded in Mexican Pesos or bushels of corn?

After the exchange rate is determined for a currency, it all ends up the same doesn't it?

 

[kyleAF]

No, and biggest issue here is a political one. Iran's market is relatively small, but if OPEC did it, it would be big. OPEC has already talked of getting off of the dollar eventually, just not yet.

This is one of the main reasons that foreign countries bother holding dollars in reserves, even as it continues to weaken: all oil transactions are conducted in dollars.

 

[obstruksion]

What difference does it make if it is traded in Mexican Pesos or bushels of corn?

After the exchange rate is determined for a currency, it all ends up the same doesn't it?

If they get paid in dollars, then they hold those dollars unless they sell them on the currency markets. If they choose to hold the dollars as an investment and the Fed devalues the currency, then they lose purchasing power with those dollars. If this prompts them to get rid of the dollars, then that depresses the price of dollars. The Fed and the low interest rates are putting the screws to these countries, but they are F'd either way. At some point their best option will be to cut bait and starting taking stronger currencies in payment. Dubai is turning their dollars into infrastructure while they still have value. Smart move, but how will people get to Dubai when oil prices are too high for people to fly there?

 

[FindLiberty]

Instead of using GOLD, the usd is now "backed" by OIL, using it as
the worlds Oil Exch Std since 1971. Iran's push to un-link the usd from oil
is like Goldfinger planning to blow up Fort Knox (I know, now
it's empty anyway as we are several zillion percent fiat paper now).

It's "a finacial attack" and all the reason the usgov needs to start bombing.

 

[Dr.3D]

So, the USgov would start bombing because they let the FED devalue the dollar?
Somehow, I am getting confused. Why bomb somebody else because of what our country is doing?
Seems like they would want to bomb the FED instead.

 

[Kotin]

So, the USgov would start bombing because they let the FED devalue the dollar?
Somehow, I am getting confused. Why bomb somebody else because of what our country is doing?
Seems like they would want to bomb the FED instead.

good question.

maybe to royaly screw both sides

 

[FindLiberty]

..bomb the fed? That might help us transition to exchanging dead sparrows and twigs
instead of using fiat money.

Every time a country mentions going off the usd... they get bombed or
the cia throws their election / eliminates their leader, etc. The country
ends up buying back a lot of replacement infrastructure using...
US Dollars.

 

[Libertytree]

It's a beautiful plan really. I think it depends on what you're planning.

I think they have it rather well thought out.

 

[Pauls' Revere]

So, the USgov would start bombing because they let the FED devalue the dollar?
Somehow, I am getting confused. Why bomb somebody else because of what our country is doing?
Seems like they would want to bomb the FED instead.

Blame,.. and then bomb. thus the headline reads
"Iran causing global collapse of world economy, US to invade and save everyone...etc." Seriously, The FED will never admit to devaluing the dollar! and our government will never admit to allowing The FED to do it. Makes perfect sense to me.

 

[justatrey]

Didn't Saddam Hussein start selling oil in currencies other than the dollar? Didn't we invade Iraq shortly thereafter? Wasn't oil back to being sold exclusively in dollars again shortly after the invasion? I'm convinced this was the biggest reason for the invasion.

 

[acptulsa]

What difference does it make if it is traded in Mexican Pesos or bushels of corn?

After the exchange rate is determined for a currency, it all ends up the same doesn't it?

FindLiberty answered your question, but that answer was a little cryptic. Let me try to clarify it.

The value of the dollar, like anything else traded on the open market, is a function of supply and demand. If the demand is bigger than the supply, you wind up paying more for it. If supply is plentiful and there's no demand, the commodity is "a dime a dozen". Now, the Fed likes to have the freedom to print the hell out of them on occasion. So, as they become as common a tree leaves, or, if you prefer, "twigs and dead sparrows", how do you keep the value up out of the basement? Well, one way is to ensure there's always a demand for them. If you need oil, and you need dollars to buy oil, you need dollars, right? And if you need dollars, there's a demand to offset the excess supply.

So, the petrodollar will always be in demand--unless we let Iraq and Iran get away with selling oil for euros, pesos or bushels of corn. And many people think that's why Hussein was invaded more than anything else. Clear as mud?