So we have conflicting reports on not only whether Iran will open its oil bourse, but if they do, what the effect will be. My guess is that they will, but that the effect will be just another crack in the foundation of the USD, slowly adding to its continuing decline. After all, this is the only way the US can attempt to manage its massive debt position, all at the expense of the US middle class, of course.
By The Associated Press
via the Globe and Mail, Toronto
Friday, May 5, 2006
Iran -- Iran took a step on Friday toward establishing an oil market denominated in euros, a plan analysts described as highly unlikely to materialize but which in theory could have serious consequences for the U.S. economy.Iranian state-run television said the country's oil ministry granted a license for the euro-denominated market, an idea first floated back in 2004, though just who would trade on it remains unclear.If the market were to succeed, or if Iran simply demanded payment for its oil in euros, commodities experts said, it could lead central bankers around the world to convert some dollar reserves into euros, possibly causing a decline in the dollar's value.
Oil is currently denominated in dollars around the globe, whether through direct sales between producers and consumers or in trades made on markets in New York and London. But if one day the world's largest oil producers allowed, or, worse, demanded euros for their barrels, "it would be the financial equivalent of a nuclear strike," said A.G. Edwards commodities analyst Bill O'Grady. Click title to continue reading...