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Author Topic: Iran oil bourse at the end of September
Frustrated Mess
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posted 08 July 2006 02:31 PM      Profile for Frustrated Mess   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
The exchange will have a positive impact on oil sales, not only in Iran but in the wider Persian Gulf region and is slated to replace the current dollar-based oil exchange with one based on the euro

Let loose the imperial dogs of war

From: doom without the gloom | Registered: Feb 2005  |  IP: Logged
B.L. Zeebub LLD
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posted 09 July 2006 12:14 AM      Profile for B.L. Zeebub LLD     Send New Private Message      Edit/Delete Post  Reply With Quote 
Let slip....

But beyond pedantry, this is interesting. The question is whether or not the U.S. still has enough influence with the Saudis and the Gulf States to prevent them from trading in Euros. While Iran's reserves are large, their major petroleum export is natural gas, and it's crude that's the big issue.


From: A Devil of an Advocate | Registered: Sep 2004  |  IP: Logged
ghlobe
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posted 09 July 2006 09:34 AM      Profile for ghlobe        Edit/Delete Post  Reply With Quote 
The Iranian government has been talking about this for years, and like most other projects in Iran, it never finishes. Last time it had a "final" opening date of March 2006!!!

I somehow doubt that their idea is anything more than a political ploy.


From: Ottawa | Registered: Jun 2006  |  IP: Logged
Frustrated Mess
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posted 09 July 2006 10:38 AM      Profile for Frustrated Mess   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
Let slip....


That could result in a civil suit.

quote:

Iran's reserves are large, their major petroleum export is natural gas, and it's crude that's the big issue.

Are you sure? Natural Gas heats a great number of homes in Europe and North America. Canada is expected to be a net importer of natural gas before the end of this decade (in part due to NAFTA proportinality rules). Natural Gas is also playing a larger role in feedstock for fertilizers.

In the east, serious arguments are already being raised as economically depressed towns along the US eastern seaboard begin considering building ports for receiving liquified natural gas. The arguments, of course, are over the potential for disaster.

North America will become more dependent on foreign supplies of natural gas almost all of which is in places the Bush regime -- with his Harper dummy firmy on his lap -- is intent on seriously pissing off.


From: doom without the gloom | Registered: Feb 2005  |  IP: Logged
Stephen Gordon
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posted 09 July 2006 10:59 AM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
This is very, very low on the list of things to spend much time worrying about. Oil and currency traders have always been able to do the arithmetic required to calculate oil prices in any given currency. The USD is just a unit of account; expressing the oil price in terms of another currency doesn't affect anything.
From: . | Registered: Oct 2003  |  IP: Logged
Frustrated Mess
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posted 09 July 2006 01:10 PM      Profile for Frustrated Mess   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
The USD is just a unit of account; expressing the oil price in terms of another currency doesn't affect anything.

You're kidding, right?

http://www.energybulletin.net/12463.html

I think while the article is very good, what is really important is only hinted at in the last sentence:

"The possibility that the Iranian oil bourse might not use euros would not necessarily diminish its significance and there could still be good reason for believing that US/UK governments and financial interests would still be strongly opposed to it as it would challenge their control of oil trading, but that is another question."


From: doom without the gloom | Registered: Feb 2005  |  IP: Logged
Stephen Gordon
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posted 09 July 2006 01:49 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
The reserve currency issue is an important one, but its link to the euro-denominated bourse is extremely tenuous at best. The biggest accumulators of USD reserves are Asian central banks (who are doing so to keep their currencies from appreciating against the USD), and oil exporters (who don't have to worry about protecting themselves against oil shortages).
From: . | Registered: Oct 2003  |  IP: Logged
ghlobe
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posted 09 July 2006 02:13 PM      Profile for ghlobe        Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Frustrated Mess:

"The possibility that the Iranian oil bourse might not use euros would not necessarily diminish its significance and there could still be good reason for believing that US/UK governments and financial interests would still be strongly opposed to it as it would challenge their control of oil trading, but that is another question."


Iran has a good incentive to stick with USD. The central bank of Iran has maintained a fairly constant exchange rate between USD and Iranian rial for the past few years. The raise in oil prices (partly a result of fall in USD value) puts more rials in Iranian budget, allowing the government to spend more money domestically. Because the main Iranian export is oil and the price of oil adjusts itself against the weakness of dollars, the fall in dollar value affects Iran less.

[ 09 July 2006: Message edited by: ghlobe ]


From: Ottawa | Registered: Jun 2006  |  IP: Logged
Frustrated Mess
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posted 09 July 2006 03:59 PM      Profile for Frustrated Mess   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
The reserve currency issue is an important one, but its link to the euro-denominated bourse is extremely tenuous at best. The biggest accumulators of USD reserves are Asian central banks (who are doing so to keep their currencies from appreciating against the USD), and oil exporters (who don't have to worry about protecting themselves against oil shortages).

I disagree and I think there has been a great deal of analysis on this. I don't disagree that a single Iranian energy bourse based on the Euro is in and of itself a dagger at the heart of the American empire. But if it began a trend toward energy being traded in Euros rather than dollars, then that would constitute a threat to US hegemony and would greatly reduce the requirement of nations to hold US currency.

quote:
Iran has a good incentive to stick with USD.

In purley economic terms, maybe. But in geo-poitical terms, that isn't true. The US has classified Iran as an enemy and is in the process of engaging in illegal hostilities and a build up to war. Iran has been quietly moving its assets out of US financial institutions for months. In political terms, reducing reliance on US anything is better for Iran and it might have reprecussions far beyond US-Iran relations.

From: doom without the gloom | Registered: Feb 2005  |  IP: Logged
Stephen Gordon
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posted 09 July 2006 04:08 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Frustrated Mess:
I disagree and I think there has been a great deal of analysis on this.

What do you disagree with? The data? My source is Brad Setser's excellent blog, in which he keeps close track of these numbers.


From: . | Registered: Oct 2003  |  IP: Logged
Frustrated Mess
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posted 09 July 2006 04:31 PM      Profile for Frustrated Mess   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
With this:

quote:
The reserve currency issue is an important one, but its link to the euro-denominated bourse is extremely tenuous at best.

From: doom without the gloom | Registered: Feb 2005  |  IP: Logged
Stephen Gordon
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posted 09 July 2006 05:20 PM      Profile for Stephen Gordon        Edit/Delete Post  Reply With Quote 
Then what's the link? I still don't see it, and that column - which 'links' them by using the rhetorical device of 'talking about them in the same article' leaves me no wiser.
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ghlobe
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posted 09 July 2006 05:30 PM      Profile for ghlobe        Edit/Delete Post  Reply With Quote 
quote:

In purley economic terms, maybe. But in geo-poitical terms, that isn't true. The US has classified Iran as an enemy and is in the process of engaging in illegal hostilities and a build up to war. Iran has been quietly moving its assets out of US financial institutions for months. In political terms, reducing reliance on US anything is better for Iran and it might have reprecussions far beyond US-Iran relations.

Iran has no assets in the US or its financial institutions since the hostage crisis (1980). Furthermore, Iran has been under a total embargo by the US since 1994. No business or finanical transaction between American and Iranian companies or banks has been allowed in the past 12 years. There is no reliance on the US at all.

Political hostilities between Iran and the US goes back 27 years. Nothing new there either.


From: Ottawa | Registered: Jun 2006  |  IP: Logged
Frustrated Mess
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posted 09 July 2006 06:24 PM      Profile for Frustrated Mess   Author's Homepage     Send New Private Message      Edit/Delete Post  Reply With Quote 
quote:
A defiant Iran announced yesterday that it has begun pulling its foreign currency accounts out of European banks to protect its assets from possible UN sanctions over its nuclear program.

As analysts estimated the amount of those funds at up to $50 billion, Iran also called for a reduction in Organization of Petroleum Exporting Countries oil production -- raising the possibility that the country would deploy its oil prowess in its standoff with the West.

Harvard


Sorry, I should have said Western financial institutions rather than US. But given the record and the history I am sure I can be forgiven for not seeing a huge distinction.

quote:
Then what's the link? I still don't see it, and that column - which 'links' them by using the rhetorical device of 'talking about them in the same article' leaves me no wiser.

You asked me what I disagreed with and I told you. What more do you want?


From: doom without the gloom | Registered: Feb 2005  |  IP: Logged
ghlobe
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posted 09 July 2006 07:08 PM      Profile for ghlobe        Edit/Delete Post  Reply With Quote 
quote:
Originally posted by Frustrated Mess:

Sorry, I should have said Western financial institutions rather than US. But given the record and the history I am sure I can be forgiven for not seeing a huge distinction.


In this scenario there is a difference, because we are talking Euro vs. Dollar for oil. So Iran's taking its assets out of European banks would hurt Euro and help US dollar instead.

However I believe the amount mentioned in that article was grossly exaggerated. Iran's total foriegn currency deposits cannot be more than 10 billion dollars, and the new Iranian government is spending it fast.


From: Ottawa | Registered: Jun 2006  |  IP: Logged

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