Although it hasn’t been talked about much, Washington must be very concerned.
The new oil exchange, opening this month in Tehran, could compete with New York’s Mercantile Exchange and London’s International Petroleum Exchange. With one critical difference: The oil will be priced in euros, not U.S. dollars.
That means Europeans will no longer have to buy and hold U.S. dollars to secure payment for oil. They will be able to purchase oil with their own currency. It may allow the Chinese and Japanese to reduce their dependence on the dollar. And Russians have an inherent economic interest in adopting the euro because the bulk of their trade is with European countries.
Meanwhile, the Arab countries exporting oil need to diversify against the rising mountains of U.S. dollars they’re collecting.
The economic implications of a successful Iranian Oil Bourse are significant, and could create a shift in capital flows, sending the U.S. dollar into a deeper plunge. A rationale for Washington to seek to act sooner rather than later.
posted by Karl Ortenburg @ 3:15 PM
3 Comments:
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