Go smell some interesting News!
May 1st, 2008 by A/CSomething I have just heard and since you guys are in the Middle East thought you might have heard. Those in America may not have, but I would like to know if THIS IS TRUE OR JUST HYPE.
If true this it will explain a lot of questions such as the weakening US Dollars, The Bush Governments sudden plans with Iran, the huge Interest in Iran etc… The same plans where being made prior to Iraq invasion/Insergence by their Government, only they were too slow…
Here is the report and the link so if anyone can shed light on this I would really like to know…
And what are the flow on effects for the rest of us if this is true?
Canadian Economic Press
Iran No Longer Using U.S. Dollar for Oil Transactions
13:09 04/30 (CEP News) – Iran will no longer conduct oil transactions in U.S. dollars, one of the country’s top Oil Ministry officials said Wednesday. Oil Ministry official Hojjatollah Ghanimifard was quoted on state television as saying, “The dollar has completely been removed from our oil trade … Crude oil customers have agreed with us to use other currencies (in the trade).”
Iran, OPEC’s second-largest producer, has substantially reduced its dependence on the U.S. dollar over the last year as a result of the dollar’s decline in value.
The move was foreshadowed by tough talk from Iranian President Mahmoud Ahmadinejad last November following a two-day OPEC summit, when he said the U.S. dollar has “no economic value” and called it “a worthless piece of paper.”
It was Iran that raised the issue of the weak U.S. dollar at the OPEC summit, proposing to instead tie oil prices to a currency basket.
The relationship between Iran and the U.S. has been tense since the U.S. accused Tehran of using its nuclear program for the development of weapons and supporting Shiite militants in Iraq.
What are your thought on this???
US Dollar piece of useless paper? Come to think about it maybe it is true however I still don’t quite understand the reason behind the price hike of petrol..
Nur Sarah Lam’s last blog post..Its 3 am..
Greed is the most likely cause…
Yup greed is the fuel with the black stuff @ $120 per barrel & climbing-rumours here of the Ae DIRHAM depegging from the $.
It’s unusual to see Canada in the same context of Iran. Gulp.
Very interesting question AC. Did not catch this news story myself yesterday, so thanks for the update, I picked up another report of the same on Bloomberg today.
However the CEP report does not offer any insights as to why the dollar is weak, nor the current American threats to Iran, and any suggestion this is the case, in my opinion, is no more than ill informed scaremongering that ignores the wider picture.
The Americans have been in a constant state of threat against Iran since the Shah was deposed and Ayatollah Khomeini took power in 1979. It is nothing new, but has been greatly heightened by the fall out of 9/11, Iran’s nuclear ambitions, their alleged support of insurgents throughout the Middle Eastern conflict areas, and their inflammatory threats to Israel.
As to why the dollar is weak, this due to the American trade deficit, they import far more than they export. What this means is that America is in debt to the rest of the world, in other words, they owe the rest of the world far more than the rest of the world owes them. They are in the red.
In order to rectify this situation, they need to make their exports more appealing to foreign customers. They do this by reducing the value of the Dollar and American goods become cheaper for foreign purchasers to buy.
This is, of course, a very simplistic explanation, though is the basis of the far more complex story as to how the dollar has weakened so drastically.
However, traditionally the US has adopted a ‘strong dollar’ policy, this is what has kept the currency as the international benchmark and hence why most commodities, oil included, are traded in US Dollars.
Iran’s OPEC contribution, is approximately 11% to 12%. So it is a hit on the US and their Dollar value issues, but it’s not the end of the world. And, it has to be said, it is a clever way for Iran to hit back at the US and GW without posing any violent threats.
The question in my mind is, how will the debacle of Middle Eastern conflict be resolved going forwards?
Already good ol’ George is in virtual retirement mode, anything done by him now, in true last-few-months-of-term-for-democratically-elected-leader style, will only be to try and create imagery of his being a worthy term in office and enhance his historical status for the good of his own vanity.
This is why the US elections are so important. If you are worried by the CEP report AC, you should be to scared sh1tless by the potential of the 3 wise monkeys currently vying to be GW’s replacement.
I would be interested to hear views from Dubai Guy and Buj on this.
Brilliant insight for me David, cheers.
Thanks David..
The elections over there are scary.. to tell the truth I seriously doubt if any of them have what it takes to pull America and the Middle east ie Iraq….out of situation they are in…
What do you think the flow on effect, if any would be, however if other OPEC Countried follow suit which is rumoured to be a possibilty?
If the whole of OPEC were to trade in a different currency, it woud be a massive blow to the US…..
As Jim said the Gulf States (the major OPEC members) are strongly rumoured to be considering decoupling their domestic curency from the Dollar, which have been pegged to it for many years.
Kuwait already has, using a basket of currencies to benchmark against with the US dollar greatly reduced. Their objective was to reduce inflation by making the Kuwaiti Dinar more competitive for buying foreign goods that are traded in Dolloars. However, this has proven not to work for them as inflation continues to grow there.
UAE residents will doubtless remember GW’s recent visit to Dubai (and the rest of the Gulf) when the town ground to a halt. It is rumoured that his intention was to persuade the Gulf countires not to decouple their currencies because of the ramifications on the American economy.
Inflation is high in the region, with the UAE’s official figure at 9.4%, but other sources suggesting it is in actual fact as high as 28%.
The question is, would decoupling the regional currencies, or even changing OPEC’s traded currency really provide long term answers? Currencies fluctuate. Period. It has happened before and will happen again, with any and all currencies. If the Dollar bounces back, will the region change back? What will it do to the credibility of the local economies to change?
I suspect Iran has changed its oil currency specifically to attack its adversary, but their position is different to at least the Gulf States OPEC members, as their position is one of allies of the US.
To answer your question AC, I think you need someone with far greater insight than mine.
Ta for the valuable insights David S,
Cheers.
thank you David, your insight is valuable and thank you very much for it…
I am going to ponder on this as it is 1.30 am.. and the eyes are sleepy finally and the pups are quiet…
might ask more in the morning thanks heaps
What’s so great about money anyways. Money sucks.
Money only sucks when you are a spoilt brat who has never had to provide for himself or his family
I’m presuming thats not a comment directed at Zack FF.
I have had to provide for myself for a number of years and still agree with Zack, money sucks.
I too agree Lib..
Money Sucks
But what sucks More
Is not having any…
Never a truer word spoken.
Damned if you do, damned if you don’t.
thats about right….
dont need millions just enough to pay the bills and be comfy….. dont need plasma screens…
Money sucks? Great, I’ll have yours.
Funny guy you are Nemo
now now boys…..
i’ll settle it for you and neither of you can have it
we’ll donate it all to my fav charity
the Aussie Cynic Family Trust… lol..;)
Good luck with my money FF, lol.
I know just how to spend it Lib, you’ll never have to hate it again.
We live simply because it is the only way to overcome the higher amount of dollars spent.
A bike works for transportation if it comes to that. Wood works for fuel. A garden grows food. And we LOVE the FREEDOM this offers…peace of mind.
Hugs, JJ
JJ Loch’s last blog post..Blossoms Bursting in the Forest
Very true..
but where I am if you wish to ride your bike to the nearest main town.. (we have supermarket and bits and peices but if you want clothes, parts, nursery and garden supplies etc) you would have to climb the mountains about another 300 metres up… to attitude of 900 metres plus… then ride over the mountains for 180km in one direction or 257km in the other) and in winter it is impossible because of the snow and ice….
I would if I could but not going to happen…. this end… but if you are close enough to a major centre then go for it…..
I would because at the moment it costs us around $100 return to drive to our closest…
Flowers included eh JJ!
Keep up the great imagery over at your blog….