What About The Dollar: Russia, Iran Announce $20 Billion Oil-For-Goods Deal

Tyler Durden's picture


Spot what is missing in the just blasted headline from Bloomberg:


If you said the complete absence of US Dollars anywhere in the funds flow you are correct. Which is precisely what we have been warning would happen the more the West and/or JPMorgan pushed Russia into a USD-free corner.

Once again, from our yesterday comment on the JPM Russian blockade: "what JPM may have just done is launch a preemptive strike which would have the equivalent culmination of a SWIFT blockade of Russia, the same way Iran was neutralized from the Petrodollar and was promptly forced to begin transacting in Rubles, Yuan and, of course, gold in exchange for goods and services either imported or exported. One wonders: is JPM truly that intent in preserving its "pristine" reputation of not transacting with "evil Russians", that it will gladly light the fuse that takes away Russia's choice whether or not to depart the petrodollar voluntarily, and makes it a compulsory outcome, which incidentally will merely accelerate the formalization of the Eurasian axis of China, Russia and India?"

In other words, Russia seems perfectly happy to telegraph that it is just as willing to use barter (and "heaven forbid" gold) and shortly other "regional" currencies, as it is to use the US Dollar, hardly the intended outcome of the western blocakde, which appears to have just backfired and further impacted the untouchable status of the Petrodollar.

More from Reuters:

Iran and Russia have made progress towards an oil-for-goods deal sources said would be worth up to $20 billion, which would enable Tehran to boost vital energy exports in defiance of Western sanctions, people familiar with the negotiations told Reuters.


In January Reuters reported Moscow and Tehran were discussing a barter deal that would see Moscow buy up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goods.


The White House has said such a deal would raise "serious concerns" and would be inconsistent with the nuclear talks between world powers and Iran.


A Russian source said Moscow had "prepared all documents from its side", adding that completion of a deal was awaiting agreement on what oil price to lock in.


The source said the two sides were looking at a barter arrangement that would see Iranian oil being exchanged for industrial goods including metals and food, but said there was no military equipment involved. The source added that the deal was expected to reach $15 to $20 billion in total and would be done in stages with an initial $6 billion to $8 billion tranche.


The Iranian and Russian governments declined to comment.


Two separate Iranian officials also said the deal was valued at $20 billion. One of the Iranian officials said it would involve exports of around 500,000 barrels a day for two to three years.


"Iran can swap around 300,000 barrels per day via the Caspian Sea and the rest from the (Middle East) Gulf, possibly Bandar Abbas port," one of the Iranian officials said, referring to one of Iran's top oil terminals.


"The price (under negotiation) is lower than the international oil price, but not much, and there are few options. But in general, a few dollars lower than the market price."

Surely an "expert assessment" is in order:

"The deal would ease further pressure on Iran's battered energy sector and at least partially restore Iran's access to oil customers with Russian help," said Mark Dubowitz of Foundation for Defense of Democracies, a U.S. think-tank.


"If Washington can't stop this deal, it could serve as a signal to other countries that the United States won't risk major diplomatic disputes at the expense of the sanctions regime," he added.

You don't say: another epic geopolitical debacle resulting from what was originally intended to be a demonstration of strength and instead is rapidly turning out into a terminal confirmation of weakness.

Also, when did the "Foundation for Defense of Petrodollar" have the last word replaced with "Democracies"?

Finally, those curious what may happen next, only not to Iran but to Russia, are encouraged to read "From Petrodollar To Petrogold: The US Is Now Trying To Cut Off Iran's Access To Gold."

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Wed, 04/02/2014 - 13:59 | 4617966 JJSF
Wed, 04/02/2014 - 14:02 | 4617980 NotApplicable
NotApplicable's picture

It's funny seeing petrodollar-busting deals priced in dollars.

Wed, 04/02/2014 - 14:04 | 4617992 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Very ironic WHAHAHAHA. Game over assholes!

Wed, 04/02/2014 - 14:26 | 4618106 Two-bits
Two-bits's picture

Queing the chinese/iraninan/russian cyberterrorist attack on the HTF system that crashed the markets and led us into WWIII...

Wed, 04/02/2014 - 14:44 | 4618167 ApollyonDestroy
ApollyonDestroy's picture

How dare those "evil" empires of the east defy the circus that is the United States. Sad that more Americans will believe they are the bad guys. Fucking cows

Wed, 04/02/2014 - 15:23 | 4618326 Bindar Dundat
Bindar Dundat's picture

Oil for Bitcoin!

Wed, 04/02/2014 - 15:26 | 4618348 SafelyGraze
SafelyGraze's picture

ha ha ha

joke is on you, russia and iran

you have to have dollars in order to buy food and oil from each other


Wed, 04/02/2014 - 15:50 | 4618432 SWRichmond
SWRichmond's picture

So Russia enters the "oil laundering" business openly.

Putin is definitely, though incrementally, going "all in".  So far China has backed Russia, and India has so far, diplomatically at least, seemed to support Russia.

We won't recognize the political landscape in another few years.  The crisis will not be allowed to happen, as far as the US oligarchs are concerned, until the middle class has been completely looted and are willing to accept sharecropper status.  These actions abroad challenge that timetable.

Wed, 04/02/2014 - 16:48 | 4618657 4 wheel drift
4 wheel drift's picture

These actions abroad challenge that timetable.


exactly......  the west is living off its fat... and what reagan achieved has been wasted away by both the subsequent left and right polititcal sons of whores....   what they have not seen is the inevitable and obvious....  and the collective west not only fail to see, but further in their attempt to convert the best system in the world into a sharecropper system...(by an evil alliance between banksters and politicians) basically have motivated and caused so that the rest of the world has arrived at this deal.....  (culminating with the M@TWH....   whose participants are not only evil, stupid, or both)

furthermore.....  the on-going growth of a middle class in all these other countries will simply erase the 300 mil (plus) "consumer market" the USA has been relying on.....   let's see.....  china....  india....  russia..... etc. etc etc....  populations....  (emerging middle class ?  or even if these countries become dictatorships/oligarchies (call them what you will)  the point is... they are potentiall larger consumers than the USA.....  and oh..  btw   who is manufacturing what ?

key words.....    time schedule of these changes.....  things are happening much faster.....

Wed, 04/02/2014 - 17:03 | 4618712 Tall Tom
Tall Tom's picture

Reagan did not achieve anything. None of his initial campaign promises were realized. He did not abolish the Fed or return to the Gold Standard.




The White House was run under George HW Bush for TWELVE YEARS.


Stop the BULLSHIT Red Team/Blue Team garbage.


Go sell that illusion elsewhere.

Wed, 04/02/2014 - 18:06 | 4618861 Jack Napier
Jack Napier's picture

another epic geopolitical debacle resulting from what was originally intended to be a demonstration of strength and instead is rapidly turning out into a terminal confirmation of weakness.

Totally missed the mark on this one. All is going according to plan. The actors we have playing world leaders are good at convincing us they are stupid, but they are not. The effect of the JPM transaction block would have been anticipated by anyone who doesn't sit in front of the TV all day. Obviously it's not about the $5,000.

It's about giving Russia a leg to stand on, which is all we've given them this entire scenario. Consider that if the West had not thrown a coup that Russia would not have Ukraine. The West set these wheels in motion deliberately.

Since JPM is an arm of the Fed, and since the Fed answers to Basel, not the USA, they have no reason not to apply pressure wherever profit dictates. Now that the East has all the gold, I expect more internal "uh, did I do that?" efforts to undermine the USD which has served its purpose for globalization. The elite are ready for the next phase.

Wed, 04/02/2014 - 19:12 | 4619109 Pitchman
Pitchman's picture

Correct!  The illusion is to believe the FED acts to protect the dollar, instead of realizing the destruction of the petro-dollar is what its globalist masters demand and fiat currencies deliver. Like any race, the race to the bottom needs a leader.

Accordingly, war with Russia, Syria, Iran or whoever will do.  Peace is such a drag on profits.  So a wider regional or perhaps world war is in order.  KBR and Reytheon can continue to suck off the public tit; collecting fantasy notes that can be converted into real money, gold/silver.

Meantime the wider conflict can be used to further separate the consumer from their duties as a citizen patriot.  It also acts as the perfect set up to muzzle dissenters and lock down the homeland; squeezing the last breath out of our Constitutional Republic.

And the deluded, jingoistic American people shout USA, Usa, usa.

Please Visit: Inflection Point

Wed, 04/02/2014 - 22:17 | 4619754 SoberOne
SoberOne's picture

The conspiracy theorist in me can't help but think there has to be some genius nwo tactician knew these consequences would come and are accelerating the dollar's death.

Wed, 04/02/2014 - 23:02 | 4619892 smlbizman
smlbizman's picture

isnt killing the dollar the whole point....where its just a matter of whom will get blamed???

Thu, 04/03/2014 - 06:14 | 4620411 Truthseeker2
Truthseeker2's picture



Obama’s Ukraine Fiasco Will Trigger US-EU Economic Ruin…
Wed, 04/02/2014 - 20:00 | 4619260 nostromo17
nostromo17's picture

 I agree it appears we did instigate the situation in the Ukraine. I'd go further and wonder if anyone instigating had actually thought out a desireable or even feasible outcome.

Its very unlikely Russia would give up the Ukraine considering its considerable huge interest in gas pipeline pumping their gas through the country. Its unreasonable even to expect they would give that up since its worth a lot economically to the Russian economy some tens of percents of it. So what the hell was the plan or pipe dream  and more concerning was there was no plan or the undertaking was a delusional undertaking? Isn't anyone with a brain running this stuff?

The only feasible answers to quibbling and allowing Russia to "keep" what they take in Ukraine is to bring up the conversation with regards to whether anyone will or won't act against Russian geographic expansion. Perhaps a few phone calls could have served that hypotherical end better.

So far the alledgedly sorta heavily Neo-fascist western (for the moment) part of Ukraine appears it will be more broke than ever without Russian gas pipeline economic support, the gas still flows or can be shut off at will by Russia as before, Europe has gained nothing but the opportunity to inadequately support the new member of the European Union Whats-left-of-Ukraine.

It seems like incompetent bumbling by incompetent diplomats with no intelligent input from any intelligence agency (who are too busy collection scads of useless data tapping countries phone lines and playing with the internet to do any intelligence anymore...) The 'administration' would seem to either be cohort with the bumblers, i.e., just idiots too, or worse is not performing any executive function whatsoever.

What the hell was the plan if there was one by the U.S. or do we just screw around with a lost cause to see if we might luck out some unknown way sorta adlibbing global policy. Seems dangerous due to basically relying on unintended consequnces from the get go.

The extent depth and totality of human ignorance and stupidity and just plain lack of any plan never ceases to amaze.

WHoever these morons are behind the Ukraine Muddle, they have to go.


Wed, 04/02/2014 - 22:05 | 4619722 disabledvet
disabledvet's picture

Absolutely top shelf comment..."too late, we're going in." One look at the current situation says to me relative to Ukraine "Putin ain't got shit." He got baited into Crimea...and now he's trading oil for...oil?

"Persian Rugs"? I mean...wtf does Iran make that Russia doesn't already? And the answer of course is a full on push into Leba-none proper and Hezbollah.

Once NATO goes all in into Ukraine and the Russian people discover not only tis a "fait accompli" and there is NOTHING that can be done to turn this back...you have to hit back in the Middle East.

That completes my crystal ball I'm afraid not least because I am simply completely ignorant of the region en toto...but outside of Libya fail to see...is this serious?...something "formalized"?

The existence of Israel is an affront to the Islamic world. This is a pure guess but once we go in heavy into Ukraine (taking Kalingrad, pushing hard the separatists in Crimea, start trying to undermine Putin himself) I think there would be a probability of total war between a lot of Islam and the West.

Mali is already a problem. If "Europe" goes all in on Libya...look out.

Wed, 04/02/2014 - 22:09 | 4619731 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Trouble I have with this kind of barter is why does Russia need oil? They already are exporting quite a bit of it elsewhere.

Wed, 04/02/2014 - 23:39 | 4619991 Rock On Roger
Rock On Roger's picture

You've answered your own question.

Thu, 04/03/2014 - 00:44 | 4620097 UrbanMiner
UrbanMiner's picture

The colonized countries of Zion are not happy with the outcome, Crimea was a miscalculation. Russian encirclement is proving much more tedious than expected. If you have doubts consider the position of Cheney and company, they need Russia defeated and their timeline is being distorted and it is causing them to rush into plans. Syria was a setback, Iran was to have been conquered by now, all setbacks.

The USD is to be replaced with the IMF issued super fiat, do you think barter deals outside of the fiat system are part of the plan? 

When you say the elite are ready for the next phase the question is, which elite are you referring to? Which faction of power? 

Things within the Matrix are amiss, a few wildcards thrown in from the 'gods', Greek mythology style, have wreaked havoc with the outcomes. 

Thu, 04/03/2014 - 02:12 | 4620211 UselessEater
UselessEater's picture

Jim Willie - of interest.


1. The Ukraine turmoil and Russia and China's coordinated Financial and Commercial Response to the threats of the West led by the US
2. Though most of the Non-Western world is backing Russia, there are 3 countries in particular that will play a key supporting role in this new 'cold war', and at least two of these have been strong allies of the US in recent times.
3. Jim gives his insight into what he sees happening to US treasuries and the US dollar, and the Petrodollar in the short and long term.
4. Jim forecasts a 'Split' dollar, a domestic dollar, and dollars held outside the US will become 'International' dollars.
5. The pressures that Jim sees placed upon the Domestic dollar and it's near instantaneous 33% devaluation (to start.)
6. The coming BARTER System for settlement of international trade, reducing the US dollar to the dustbin of history.

Thu, 04/03/2014 - 06:54 | 4620449 Drifter
Drifter's picture

Nope, not barter, another reserve currency taking USD's place and clearing system taking SWIFT's place, leaving America on the outside looking in for the first time in 70 years.

Wed, 04/02/2014 - 21:11 | 4619571 4 wheel drift
4 wheel drift's picture


hope you are manufacturing something so you can go sell to the emerging....   er..   consumer market......



go take yer meds......

Wed, 04/02/2014 - 17:11 | 4618735 Squid-puppets a...
Squid-puppets a-go-go's picture

does America have any other technique in its diplomatic playbook other than 'outraged indignance'?

beats up every kid in the playground then gets angry why no one will play with him.


Wed, 04/02/2014 - 19:15 | 4619118 Pitchman
Pitchman's picture

We like to steal their lunch money too.

Wed, 04/02/2014 - 17:02 | 4618707 Cap Matifou
Cap Matifou's picture

Maybe time then RU to leave the debt based money system entirely, and create their own money without perpetual interest payment on it's mere existence.

Wed, 04/02/2014 - 22:10 | 4619733 disabledvet
disabledvet's picture

Sentiment is appreciated...tis impossible to do I'm afraid.

Those Russians pining for "turning inward" cannot do so relative to Ukraine. This is just too emotional...like the US Civil War.

"We killed so many of each other because we loved each other so much and had so much in common."

Wed, 04/02/2014 - 20:50 | 4619495 yatikto
yatikto's picture

In russian papers they are entertaining selling oil&gas in rubles.

I think powers that be know what is coming, hence the escalation; hoping to create leverage in future negotiations.

But I am not sure if Russians really want to negotiate with a party they don't trust.

Wed, 04/02/2014 - 22:47 | 4619835 realWhiteNight123129
realWhiteNight123129's picture

no you don't, an instrument of circulation is just there to facilitate trade, it can be credit or money, and money can be electrum, gold or silver coins, fiat money also called forced currency in the XIX century, sea shells, bitcoins, whatever people find convenient. When fiat of one country, it creates big problems, see Jacques Rueff


Wed, 04/02/2014 - 23:23 | 4619949 TheReplacement
TheReplacement's picture

A lot of stupid people don't get the "ha ha ha" part I suppose.

Wed, 04/02/2014 - 16:23 | 4618589 kchrisc
kchrisc's picture

I agree and it's funny to realize that they will be the enemy for no other reason than wanting to use a currency or money other than the dollar. Just ridiculous to ponder, but that is the insanity that we find ourselves besieged with.

Much like the American people being considered criminals if they pay with cash or possess Liberty Dollars.


"I cut alone, me and my good buddy guillotine."

Wed, 04/02/2014 - 15:22 | 4618321 inky
inky's picture

what if they had a war and nobody came?

Wed, 04/02/2014 - 15:42 | 4618400 El Oregonian
El Oregonian's picture

Well, it was fun while it lasted.

Wed, 04/02/2014 - 14:04 | 4618001 cougar_w
cougar_w's picture

They're just rubbing it in.

Wed, 04/02/2014 - 15:10 | 4618273 Antifaschistische
Antifaschistische's picture

This is the Russian reality that will ultimately have to be addressed.


...sure, this will take the next 10 to 30 years to play out, but Russia can not continue to

a. have a declining percentage of world population,

b. have so much darn land, and

c. have an increasing significance in world economics...

....all at the same time. (on a long term horizon)

Wed, 04/02/2014 - 15:13 | 4618284 CrashisOptimistic
CrashisOptimistic's picture

That's what was said 30 years ago when the US was burning 24% of global oil production with 4% of the population.

Now it burns 25% of global oil production with 4% of the population.

Wed, 04/02/2014 - 18:42 | 4619013 Antifaschistische
Antifaschistische's picture

I'm not anti-Russia in any sense...but in the long term, demographics are not irrelevant.   I believe that this "western" attack on all things Soviet is absurd and that we will all be losers in this absurd battle.  Including, most importantly, the Ukrainian people.

Even Japan...those people with the ability to improve on anything, can't hide from demographic realities. 

The US consumes 25% of the global oil production for one reason....oil is traded in our fiat currency, that we can invent.  We will continue to consume oil in this fashion until that changes.   It's not a direct function of demographics.

The Jewish population faces the same long term demographic realities if that makes everyone feel better.

Wed, 04/02/2014 - 15:25 | 4618339 Zerozen
Zerozen's picture


a. England had a small population relative to the world during its heyday in the 19th century, and it dominated the globe.

b. Nukes are a great deterrent.

Be aware, populations haven't always been smoothly growing in all countries at all times, some places (like Ireland or ancient China) went through catastrophic population collapses (multiple times!) before re-growing again, and a declining population for a generation is not an indication of terminal decline into nothingness. If social conditions and the spirit of the times change, as they easily could, growth rates could turn up into 1%+ and we both know how powerful compounding is.

Hell, look at black Africa for evidence of that (pop. 70 million after World War 1, pop. well over a billion today and the average woman there still pushing out 5-6 children all across the continent). That's at least 15x population growth in just 1 century.

It's definitely a problem for Russia but it's not the apocalyptic scenario that I've heard many Americans proclaim it to be, with so much schadenfreude.

Wed, 04/02/2014 - 16:32 | 4618600 zaphod
zaphod's picture

A historical difference this time is that many of the largest populations are not self suficient and would suffer a major collapse (+90%) if the global supply chain breaks down. Let's take your africa example, the population used to be 70M because that is what the infrastructure there could support, people had babies they just unfortunately did not survive. Today africa requires significant food aid from other continents to feed itself. What happens when dollar breaks down and the US/EU can bearly support itself, food aid stops because the US will feed itself first, what happens to africa then?

Wed, 04/02/2014 - 22:11 | 4619736 TheMeatTrapper
TheMeatTrapper's picture

When food aid breaks down, the Africans will riot. In New York, Chicago, Philly, LA, Miami and everywhere else. 

Wed, 04/02/2014 - 15:59 | 4618479 BlindMonkey
BlindMonkey's picture

I nominate myself to go to Russia immediately and begin the repopulation efforts with their lithesome natives. It is the just and right thing to do.

When do the planes leave?

Wed, 04/02/2014 - 17:37 | 4618808 Freddie
Freddie's picture

Malaysia Airlines has daily flights to Moscow.

Thu, 04/03/2014 - 01:40 | 4620182 holgerdanske
holgerdanske's picture

The  size of the population does not matter much. The quality does. Look at India vs Japan as an example.

And in the US a large part of the population is obese, illiterate and boxed in with McDonald in front of the box.


Wed, 04/02/2014 - 22:12 | 4619740 disabledvet
disabledvet's picture

Maybe they're rubbing it out?

Wed, 04/02/2014 - 14:05 | 4618006 Ignatius
Ignatius's picture

Yes, it is.

Even when currencies disappear people still remember/use it as unit of account.

Wed, 04/02/2014 - 14:10 | 4618036 Kaiser Sousa
Kaiser Sousa's picture

ah, so this explains why Gold and Silver phony paper prices r doin what theyre doin at the Comex close...



Wed, 04/02/2014 - 14:17 | 4618063 Ignatius
Ignatius's picture

Nothin' like the threat of WWIII to knock a few dollars off the price.

Wed, 04/02/2014 - 15:50 | 4618427 Unknown User
Unknown User's picture

All wars are bankers' wars. This one will be to rescue the central-banking cartel and its monetary system.

Wed, 04/02/2014 - 19:23 | 4619139 Pitchman
Pitchman's picture

Rescue or convert?

Wed, 04/02/2014 - 17:00 | 4618701 Zymurguy
Zymurguy's picture

If Russia does begin to exchange good, or their currency for oil with Iran it WILL start WWIII.  The Oil and Banking Cartels will not allow that to happen.

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