Iran to start trading oil in Euros

[Ae589]

Update - I know this erm...."area" but donrt want to out myself

You just did. Lucky you don't work in intelligence, eh?

Lucjy for you everyone got through the first 2 sylables of 'commodities' and then drifted off.

 

[zoltan]

fuck!

I am still a wage slave tho.......

 

[atitlan]

"Everything" is a bit strong. If you want an example of a country where everything that is needed is imported you should come to Africa. It isn't pretty. The US has thriving industries in many areas. It's true that a lot of manufacturing has gone abroad but that in itself doesn't cause the trade deficit, it's the country wanting to consume more than it produces. The foreign debt they take on is effectively promising future US output for current US consumtpion.

Sure, but the nature of what is consumed and produced also matters. It's OK having a healthy manufacturing base of military equipment and hi-tech medical instruments, but that production does not satisfy the consumerism that drives much of what is imported. There is also the issue of source components for equipment that carries a 'Made in the US' badge, many of which will be imported and so subject to the increased costs of imports.

In fact it is conceivable that in many areas of industry the benefits of a better exchange rate would be lost in the increased cost of the imported components used to make the final product.

This is true for the UK as well, how many 'Made in xxxx' products are actually full of components from China and SE Asia?

 

[A Dashing Blade]

Can we dump this thread into the dustbin please ?

Seconded, it's too attractive for the resident conspiriloons.

 

[Streathamite]

Bias down USD vs EUR
Bias up US interest rates particularly at the long end of the curve (top of my head)

err...in english for a t'ickie?

 

[zoltan]

err...in english for a t'ickie?

Very very very Roughly

Why bother buying USD when you can use EUR for your inelastic ( ie. not negotiable requirements ) Oil purchases ?- this makes the USD less attractive & less in demand for many - to cut a long story short, the conspiracists think this will cause the US Economy to implode over time.Its possible, but given the bollocks surrounding the mythical Iran OIl Bourse, fairly unlikely.At the minute

Ill sniff around & see if there anything that can fiill in the blanks here for you

 

[zoltan]

here we go

"“From a purely economic point of view, should the Iranian Oil Bourse gain momentum, it will be eagerly embraced by major economic powers and will precipitate the demise of the dollar. The collapsing dollar will dramatically accelerate U.S. inflation and will pressure upward U.S. long-term interest rates. At this point, the Fed will find itself between …between deflation and hyperinflation-it will be forced fast either to take its "classical medicine" by deflating, whereby it raises interest rates, thus inducing a major economic depression, a collapse in real estate, and an implosion in bond, stock, and derivative markets, with a total financial collapse, or alternatively, to take the Weimar way out by inflating, whereby it pegs the long-bond yield, raises the Helicopters and drowns the financial system in liquidity, bailing out numerous LTCMs and hyperinflating the economy.

No doubt, Commander-in-Chief Ben Bernanke, a renowned scholar of the Great Depression…, will choose inflation. …The Maestro has taught him the panacea of every single financial problem-to inflate, come hell or high water. …To avoid deflation, he will resort to the printing presses…and, if necessary, he will monetize everything in sight. His ultimate accomplishment will be the hyperinflationary destruction of the American currency …”

Article

PS - Krassimir Petrov- is regarded as a fuckin idiot, but gets lots of press with his contrary views on this bourse rubbish. The Conspiracists love reiterating his polemic.

Check out his original much quoted article.

Art

 

[guinnessdrinker]

Seconded, it's too attractive for the resident conspiriloons.

of course there is always the conspiracy of those who might want to stifle the debate to protect the USD. I'd rather want the like of zoltan explaining to us why this euro/iran business is nonsense and others replying with their own arguments. this is not a 9/11 thread.

keep it going.

 

[zoltan]

of course there is always the conspiracy of those who might want to stifle the debate to protect the USD. I'd rather want the like of zoltan explaining to us why this euro/iran business is nonsense and others replying with their own arguments. this is not a 9/11 thread.

keep it going.

AAAAAAGGHHHHHHHHHHHHHHHHHHHHH

 

[guinnessdrinker]

AAAAAAGGHHHHHHHHHHHHHHHHHHHHH

I have no idea about economics, but I'd like to learn from you, just as I like to learn from others. there are conflicting arguments, why not debate them without crying conspiraloonacy?

 

[A Dashing Blade]

of course there is always the conspiracy of those who might want to stifle the debate to protect the USD. I'd rather want the like of zoltan explaining to us why this euro/iran business is nonsense and others replying with their own arguments. this is not a 9/11 thread.

keep it going.

Wrong way round. It's up to the conspiriloons to demonstrate that this IOB thingy is actually going to happen.

In rebuttal of the actuality of this thing ever getting off the ground I would refer you here . . .

http://www.urban75.net/vbulletin/showthread.php?p=4261265#post4261265

 

[guinnessdrinker]

Wrong way round. It's up to the conspiriloons to demonstrate that this IOB thingy is actually going to happen.

In rebuttal of the actaulity of this thing ever getting off the ground I would refer you here . . .

http://www.urban75.net/vbulletin/showthread.php?p=4261265#post4261265

listen, we're not talking lizards, okay?

 

[A Dashing Blade]

listen, we're not talking lizards, okay?

Apols if any offense was take GD.

The point is that the City (who have a vested financial interest in things like that) think this story is a load of bollocks.

You have that info from two people who work in that industry.

 

[zoltan]

What excites people about this topic is the conspiracy stuff about GW Bush + his Oil chums invading southern Iran to rope in the oil fields & control the supply - this is the current live topic amongst the conspiraloons ( "CL" )

Now the CLs think that think is the start of WW3/ New crusades/ Christian vs Muslim showdown etc etc etc etc and hype the subject out of all proportion.hence the current ecitement with the Iran/US Nuclear showdown at the minute.

The Bourse subject could well take off - but never underestimate the capability of a few discreet press releases to get under the skin of an avowed enemy. I think this exchange is pretty unlikely this year & even if it did, we forget that USD can be bought in s second & transferred within a minute - we do not have to physically have a bank full of USD bills specifically for oil purchases any more - things have moved on.You could price oil in fuckin Danish Kroner on all the exchanges, but it wouldnt mean that the USD & Euro would collapse overnight - as long as its in a freely available & in a transparent currency, then things will work themselves out, if you trust the way in wihich capitalist markets work & balance themselves out .The CLs see rampant USD interest rates causing the collapse of democracy , whilst a bearded mullah sits in a cave somewhere rubbing his hands & plotting to strike at the great satan whilst their guards are down.

Its not going to happen that way.Iran has a long standing beef with the US - back to the Sha's days & him being in thr US governments pocket during the 70's. This is a possibility, but why would anyone want to trade in a country like Iran , with no clarity or market transparency ? I dont even want to get into the subject of Islamic Finance, which would take a team of Harvard eduvated PhDs to devidse a way of intergrating Western style capitalism with Sharia banking regulations to make any such exchange inviting to a western pigdog capitalist.If it does start up, then it would have to be accepted by the business world rather than the the other way around - Iran have to make this acceptable to everyone else - Iran have a great deal of face to lose .The fact this is EUR is just to distance themselves from their enemy the USA. If this had popped its head up 10 or 15 years ago, then Im sure they would be looking at a JPY or DEM demoninated contract - its a symbolic rather than a practial move IMO
...if it takes off

If it happen,. its impact will be negligible, whatever the CLs reckon about impending East-West religious Armageddon.

I could be wrong of course

 

[guinnessdrinker]

Apols if any offense was take GD.

The point is that the City (who have a vested financial interest in things like that) think this story is a load of bollocks.

You have that info from two people who work in that industry.

and that's exactly why the thread should carry on, so that the debate happens. it's no good saying it's a load of bollocks, bin it. you need to explain why and you need to let the others reply, or else they will cry conspiracy themselves. if you bin it, they may say that economic interests in the city stifled the debate.

 

[guinnessdrinker]

You couls price oil in fuckin Danish Kroner on all the exchanges, but it wouldnt mean that the USD & Euro would collapse overnight

as I understand it, the danish kroner is linked to the euro through its past link with the german mark (1982?). they just like the queen's head on their paper banknotes. so I assume it would not make any difference to the euro. but you are the one who know

 

[zoltan]

Whoops..that is a shitty example - lets say Norwegian Krone instead............the DKK , although part of the EU isnt fixed to the Euro, just like the Pound & floats against it - but a better example would be a non EU member currency - like Norway

 

[guinnessdrinker]

Whoops..that is a shitty example

 

[A Dashing Blade]

and that's exactly why the thread should carry on, so that the debate happens. it's no good saying it's a load of bollocks, bin it. you need to explain why and you need to let the others reply, or else they will cry conspiracy themselves. if you bin it, they may say that economic interests in the city stifled the debate.

Ok, ok. Just to be clear. My position is that this Iranian Oil Bourse is not imminant (certainly not March 23).

Why? Because I have looked on Reuters and Bloomberg (and therefore all main news agencies) and asked on the Oil Analysts chat channel about it (these guys having very very serious contacts in the industry up to CEO and Finance Minister level).

This issue is nowhere to be found using the first two sources with the latter reiterating pretty much what Zoltan said (although expressing it more colourfully!

Any link provided to this subject (often provided by the conspiriloon faction) fails to contain definates, it's all "the projected . . . ", "if it goes ahead" etc.

As Zoltan has pointed out, just getting this thing off the ground legally is a major undertaking.

I would also urge people to look at the mechanics of oil delivery (top of my head, deliverable Brent Crude for example has to be physically delivered to Sullom Voe oil terminal and be of a certain bend - oil is not an homogenous product-).

Wanna talk about how the cost-of-carry element of an oil derivative is going to square with Sharia Law? Havn't got a scooby myself.

Electronic trading with servers presumably based based in Iran?

Get back to basics, for an exchange to take off, it should operate in a politically stable environment.

Just some points of the top of my head and although commodities have never been an area of expertise (I'm more on the bond side these days) I've been in the City a good while now.

Therefore I conclude that this event will not happen in the forseeable. But hey, many views make a market!

 

[Streathamite]

ta v v much to zoltan69 and ADB for their expert lowdown on this thread. it's made it top reading. well done, chaps.

 

[oi2002]

John Berthelsen in Asia Times thinks Petrov et al are barking up the wrong tree and reckons the Iranian oil bourse is probably insignifigant:

The much greater threat to the US currency is the US current account deficit, which ballooned to 7% of gross domestic product
in the fourth quarter of 2005. The announcement drove the euro up to 1.202 against the US dollar as skittish traders renewed their concerns about the world's fiat currency.

 

[Backatcha Bandit]

Hmm...

Haven't seen it mentioned here at all, but Syria recently dumped the US$ for the EURO.

http://www.aljazeera.com/cgi-bin/news_service/middle_east_full_story.asp?service_ID=10636

Syria decided to switch all of its foreign currency transactions from dollars to euros amid a political confrontation with the United States, the Director General of the Commercial Bank of Syria said on Monday, according to Reuters.

...although you won't find the story on Reuters anymore!

 

[zoltan]

Probabaly go more to do with being named as part of the "axis of arsey" by GWB than anything to do with the Iranian situation- Ive Recently been to Nortk Korea- ditto - USD are not accepted anywhere ( well, anywhere you as a westerner pigdog is allowed to go ! ) - its all priced in Euros - look also at Cuba -symbolic moves towards anything apart from USD.

THo' the Euro has been under pressure for some time, cos of US fiscal policy & aggressive Fed attitudes, you have top remeber that the EUR represents a trading bloc of about 350M people + the newer states - not an insignificant number by any means.

 

[A Dashing Blade]

...although you won't find the story on Reuters anymore!

Sorry for C&P but it's news story nL13432231 on a Reuters terminal
22:32 13Feb2006 UPDATE 3-Syria switches to euro amid confrontation with US

(Adds decree, 4th paragraph)
By Khaled Yacoub Oweis
DAMASCUS, Feb 13 (Reuters) - Syria has switched all of the state's foreign currency transactions to euros from dollars amid a political confrontation with the United States, the head of state-owned Commercial Bank of Syria said on Monday.
"This is a precaution. We are talking about billions of dollars. Switching to the euro will help us avoid settlement problems in the United States," Duraid Durgham told Reuters.
"The move is also needed to avoid complications with our correspondent banks, which have expressed a preference to deal in euro under these circumstances," he said.
The government ordered the switch to the Euro on February 5 through a decree that covers all public enterprises, loan agreements and imports of goods and services by the state.
Most of the government's foreign currency flows go through the Commercial Bank, whose U.S. assets were frozen by Washington in 2004 as relations with Syria deteriorated.
The bank, which dominates the Syrian market, also stopped dealing with dollars for international private flows, such as imports, exports and letters of credit, Durgham said.
He said the switch would mean euro pricing for crude oil sales, a major foreign currency earner for Syria.
The latest official figure show Syria imported $6.7 billion goods in 2004 and exported $5.4 billion. Oil output is around 400,000 barrels per day.
In 2004, Washington imposed sanctions that prohibited certain U.S. exports to Syria, severed financial ties with the Commercial Bank of Syria, and froze the assets of Syrians believed linked to terrorism.
After the assassination of former Lebanese Prime Minister Rafik al-Hariri a year ago, the United States led foreign pressure on Syria for its alleged role in the killing.
Damascus denies involvement in the killing but faces the possibility of more sanctions if it is found uncooperative with a U.N. investigation into the killing of Hariri.
Regional financiers said Syria managed to minimise the damage of U.S. sanctions and deal with the economic uncertainty that followed the Hariri assassination, including pressure on the Syrian pound.
The government, controlled by the Baath Party for the last 40 years, has proceeded with steps to open up the economy after decades of central planning, naming on Monday a board to head up a stock exchange under formation.
"To its credit, the government managed to keep the economic cycle going; imports, exports and tourism did not suffer a major blow. They have reacted effectively to pressure," said Joe Sarrouh, a senior executive at Fransabank in Beirut.
One economist said the euro move by the Commercial Bank of Syria "looked like a kind of pre-emptive action aimed at making their foreign assets safer and preventing them from getting frozen in case of any conflict."
((Damascus newsroom +963 11 2228022, editing by Jonathan Oatis)) Monday, 13 February 2006 22:32:37RTRS [nL13432231] {C}ENDS

 

[Backatcha Bandit]

Cheers, ADB. Saved from the memory hole.

http://www.google.co.uk/search?num=100&hl=en&safe=off&q=reuters+syria+euro&spell=1

http://go.reuters.com/newsArticle.jhtml?type=worldNews&storyID=11193255&src=rss/worldNews

...where the 'yahoo' news version also seems to have gone.

http://news.yahoo.com/s/nm/20060213...CIb.3QA;_ylu=X3oDMTBidHQxYjh2BHNlYwN5bnN0b3J5

-
As an aside, do you find this happens often - that stories disappear off the 'public' Reuters site while still available through the telescreen?
-

The UAE get in on the action...

The United Arab Emirates, which includes Dubai, said it was looking to move one-tenth of its dollar reserves into euros, while the governor of the Saudi Arabian central bank condemned the US move as "discrimination"...

...The governor of the UAE central bank, Sultan Nasser al-Suweidi, said the bank was looking to convert 10 per cent of its reserves, which stand at $23bn (£13.5bn), from dollars to euros.

http://news.independent.co.uk/business/news/article351127.ece or in full at: http://www.aljazeerah.info/News arc...b central banks move assets out of dollar.htm

 

[TAE]

Wow, so it's actually happening.

 

[Backatcha Bandit]

Best not forget China, either.

SHANGHAI, Jan. 9 -- China has resolved to shift some of its foreign exchange reserves -- now in excess of $800 billion -- away from the U.S. dollar and into other world currencies in a move likely to push down the value of the greenback, a high-level state economist who advises the nation's economic policymakers said in an interview Monday.

As China's manufacturing industries flood the world with cheap goods, the Chinese central bank has invested roughly three-fourths of its growing foreign currency reserves in U.S. Treasury bills and other dollar-denominated assets. The new policy reflects China's fears that too much of its savings is tied up in the dollar, a currency widely expected to drop in value as the U.S. trade and fiscal deficits climb.

http://www.washingtonpost.com/wp-dyn/content/article/2006/01/09/AR2006010901042_pf.html

Is it really happening?

I'd like someone to tell me how, without the FED M3 figures, we'll be able to tell.

 

[zoltan]

This is just risk management in most cases - spread your exposure across markets. currencies & products. The current near 25 year high for Gold & other commodities like Platinum has meant that some central banks are diversifying their reserves. Logically China should spread irs risk wider, seeing as its semi floating Yuan is now internally valued/ loosely pegged against a basket of its neighbours currencies including the Yen. This happens every single day at central banks & only serves to reflect their active hedging of assets.

Wthout going too deeply into it ( and I know this will irk some posters & as its ecomonics, dont really want to get into an argument ) near future US finances could well be in trouble - with the mounting costs of a war & rampanat protectionism back home , USD interest rates look likely to rise & may stifle any real growth............

 

[A Dashing Blade]

I'd like someone to tell me how, without the FED M3 figures, we'll be able to tell.

The volume of T-Bill, T-Note and T-Bond Issuance. These are the USD denominated assets that Central Banks purchase. (and is also what are actually "printed" when people use the term "Central Banks print money")

 

[Backatcha Bandit]

TEHRAN, March 20 (RIA Novosti) - Iran denied Monday media reports that it was to open a euro-based oil exchange.

"We have no information on opening an oil exchange in the free economic zone on Kish Island [southern Iran]," a spokesman for the Iranian Oil Ministry told RIA Novosti.

He said the ministry would have had been informed if the exchange had opened.

The spokesman said the exact date of the oil exchange opening on Kish Island was still unknown.

http://www.globalresearch.ca/index.php?context=viewArticle&code=20060322&articleId=2151

Saying the date is 'unknown' would appear to be admission that it is still going ahead - just not this week.

Isn't it 'New Year' holidays in Iran right now?