News item not reported by major networks.

This month - March 2006 - Iran will open its new oil bourse - see link:

www.iranmania.com

This item has not been reported by any of the major news agencies, or discussed in mainstream financial journals.

The reason that this is important is that the Iranian Oil Bourse will be trading oil and gas in Euro Dollars and not in US Dollars. This will effectivley break the US dollars monopoly on oil trading and will open the way for other markets - such as Brent/Norway oil - to trade in Euros.

Why is this significant
At present anyone wanting to buy oil from the London IPE and New Your NYMEX has to pay in US Dollars for the oil/gas they purchase. These dollars are gained by selling goods and services to the US.
During the Carter Administration the US removed the Dollar from the Gold Standard. This means that the US treasury can print as much money as they need to pay for services and goods. Trading in Euros for oil will remove the need to hold US Dollars as a reserve currency, a possible result of this is the countries currently holding massive reserves - like China - could flood the money back on to the market. The nightmare scenario for the US treasurey would be a drop in value of up to 40% for the dollar. They would then be faced with the dilema of devaluing the currency or creating hyper inflation.

What is the likley hood of this happening?
The simple answer is slim. The establishment of an oil bourse and the confidence of the market to attract enough Buyers and Sellers to create the depth of market needed to destabilise the US dollar needs more than just the opening of the market. The technology used to deliver it needs to be proven, the reputation of trust in the bourse needs to spread. One inhibiting factor is the fact that the history of oil trading - on which all future markets are based - is expressed in terms of US Dollars, making it difficult for buyers or sellers to asses the correct price for Euros.

What does this have to do with the war on terror?
As everyone knows the war on terror is linked to oil, as this is the one factor that makes the Middle East an important region to the West. During 2003 shortly before the US lead invasion (and subsequent occupation of) Iraq, Saddam Hussein's regime had announced it was to start trading in Euro Dolars only for its Oil for Aid allowance.

The question of how worried is the Bush Administration at the opening of the Iranian Oil Bourse is one that needs answering.
The story is conspicous by its absence from the news channels and papers in the west, Especially during a time when Iran is being threatned with sanctions and worse.

mod edit to shorten link

[edit on 1-3-2006 by DontTreadOnMe]

Yeah, I was gonna make a post similar to this. I've not heard anything about the oil bourse - apart from this site!

I've actually heard a couple pieces about this on NPR within the last 6 months or so, since it was announced anyway. It's mostly been on the financial news sections, so hasn't caught much popular attention.

I imagine that once the Dubai Ports World thing either blows over or blows up, this will come out as the next OMG!FEAR! news stories.

It could get even worse for the greenback-

Bourse Director Sven Arild Andersen is fed up with Norwegian oil having to be traded in London and wants to have a commodities and energy bourse in Norway.

The Bourse Director believes that Norway already has the prerequisites for building up a Norwegian or Scandinavian energy bourse.

"This would in such case compete with the bourse in London. Why not have the ambition to outcompete the British petroleum bourse," says Sven Arild Andersen.

"Here, you could trade crude oil, natural gas contracts and establish derivatives for these products."

"In addition, we must set up a larger financial industry around this, as important in other large markets and employ many people. And which are important for the competencies that are needed beyond the extraction itself of oil and gas," says Andersen.

In Euros

Andersen in of the opinion that Norwegian oil must be traded in Euros, which can be advantageous for international customers.

"We have performed market studies and both Russia, which is a large oil exporter, as well as the countries of the Middle East have large parts of their economies in Euros.

www.energybulletin.net...

- If the shift from US $ to Euro grows it is going to cause a lot of trouble to the USA given the trade and debt situation.

I might also be worried if I were Norwegian, countries dropping the $ have a habit of attracting US aggression!