• Sprott Money
    05/06/2016 - 06:03
    The US, in its own decline, is showing this same self-destructive tendency. The worse things get, the greater the inclination of the citizenry to say, “Carry on, everything’s fine.”

US Threatens Russia Over Petrodollar-Busting Deal

Tyler Durden's picture




 

On the heels of Russia's potential "holy grail" gas deal with China, the news of a Russia-Iran oil "barter" deal, it appears the US is starting to get very concerned about its almighty Petrodollar

  • *U.S. HAS WARNED RUSSIA, IRAN AGAINST POSSIBLE OIL BARTER DEAL
  • *U.S. SAYS ANY SUCH DEAL WOULD TRIGGER SANCTIONS
  • *U.S. HAS CONVEYED CONCERNS TO IRANIAN GOVT THROUGH ALL CHANNELS

We suspect these sanctions would have more teeth than some travel bans, but, as we noted previously, it is just as likely to be 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.

As we explained earlier in the week,

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.

 

...

 

"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,"

And here is Voice of Russia, "Russia prepares to attack the Petrodollar":

The US dollar's position as the base currency for global energy trading gives the US a number of unfair advantages. It seems that Moscow is ready to take those advantages away.

 

The existence of “petrodollars” is one of the pillars of America's economic might because it creates a significant external demand for American currency, allowing the US to accumulate enormous debts without defaulting. If a Japanese buyer want to buy a barrel of Saudi oil, he has to pay in dollars even if no American oil company ever touches the said barrel. Dollar has held a dominant position in global trading for such a long time that even Gazprom's natural gas contracts for Europe are priced and paid for in US dollars. Until recently, a significant part of EU-China trade had been priced in dollars.

 

Lately, China has led the BRICS efforts to dislodge the dollar from its position as the main global currency, but the “sanctions war” between Washington and Moscow gave an impetus to the long-awaited scheme to launch the petroruble and switch all Russian energy exports away from the US currency .

 

The main supporters of this plan are Sergey Glaziev, the economic aide of the Russian President and Igor Sechin, the CEO of Rosneft, the biggest Russian oil company and a close ally of Vladimir Putin. Both have been very vocal in their quest to replace the dollar with the Russian ruble. Now, several top Russian officials are pushing the plan forward.

 

First, it was the Minister of Economy, Alexei Ulyukaev who told Russia 24 news channel that the Russian energy companies must should ditch the dollar. “ They must be braver in signing contracts in rubles and the currencies of partner-countries, ” he said.

 

Then, on March 2, Andrei Kostin, the CEO of state-owned VTB bank, told the press that Gazprom, Rosneft and Rosoboronexport, state company specialized in weapon exports, can start trading in rubles. “ I've spoken to Gazprom, to Rosneft and Rosoboronexport management and they don't mind switching their exports to rubles. They only need a mechanism to do that ”, Kostin told the attendees of the annual Russian Bank Association meeting.

 

Judging by the statement made at the same meeting by Valentina Matviyenko, the speaker of Russia's upper house of parliament, it is safe to assume that no resources will be spared to create such a mechanism. “ Some ‘hot headed' decision-makers have already forgotten that the global economic crisis of 2008 - which is still taking its toll on the world - started with a collapse of certain credit institutions in the US, Great Britain and other countries. This is why we believe that any hostile financial actions are a double-edged sword and even the slightest error will send the boomerang back to the aborigines,” she said.

 

It seems that Moscow has decided who will be in charge of the “boomerang”. Igor Sechin, the CEO of Rosneft, has been nominated to chair the board of directors of Saint-Petersburg Commodity Exchange, a specialized commodity exchange. In October 2013, speaking at the World Energy Congress in Korea, Sechin called for a "global mechanism to trade natural gas" and went on suggesting that " it was advisable to create an international exchange for the participating countries, where transactions could be registered with the use of regional currencies ". Now, one of the most influential leaders of the global energy trading community has the perfect instrument to make this plan a reality. A Russian commodity exchange where reference prices for Russian oil and natural gas will be set in rubles instead of dollars will be a strong blow to the petrodollar.

 

Rosneft has recently signed a series of big contracts for oil exports to China and is close to signing a “jumbo deal” with Indian companies. In both deals, there are no US dollars involved. Reuters reports, that Russia is close to entering a goods-for-oil swap transaction with Iran that will give Rosneft around 500,000 barrels of Iranian oil per day to sell in the global market. The White House and the russophobes in the Senate are livid and are trying to block the transaction because it opens up some very serious and nasty scenarios for the petrodollar. If Sechin decides to sell this Iranian oil for rubles, through a Russian exchange, such move will boost the chances of the “petroruble” and will hurt the petrodollar.

 

It can be said that the US sanctions have opened a Pandora's box of troubles for the American currency. The Russian retaliation will surely be unpleasant for Washington, but what happens if other oil producers and consumers decide to follow the example set by Russia? During the last month, China opened two centers to process yuan-denominated trade flows, one in London and one in Frankfurt. Are the Chinese preparing a similar move against the greenback? We'll soon find out.

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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Fri, 04/04/2014 - 14:29 | 4625660 Dre4dwolf
Dre4dwolf's picture

It's fucking game over for the U.S. only options U.S. has left

1) Start acting responsible and doing the common sense thing

2) Do something sutpid and start World War III

 

 

Fri, 04/04/2014 - 14:29 | 4625665 NotApplicable
NotApplicable's picture

Translation: "Don't make us go full-retard!"

It's a mad, mad, mad, mad, mad world!

Fri, 04/04/2014 - 14:32 | 4625685 Latina Lover
Latina Lover's picture

Petro Dollar doomed.

Fri, 04/04/2014 - 14:34 | 4625693 Divided States ...
Divided States of America's picture

The US of A, the bastion of democracy should stop fuckin minding other people's business.

Fri, 04/04/2014 - 14:36 | 4625713 DoChenRollingBearing
DoChenRollingBearing's picture

Jim Willie writes a nice piece on the destruction of the Petrodollar at the hands of Russia, China, Iran, etc.

Gold, fishez!

http://www.24hgold.com/english/news-gold-silver-emerging-dynamics-of-pet...

Fri, 04/04/2014 - 14:38 | 4625720 McMolotov
McMolotov's picture

That sound you hear is Uncle Sam's death rattle.

(And I call dibs on that for a band name.)

Fri, 04/04/2014 - 14:39 | 4625732 Latina Lover
Latina Lover's picture

Nuland

Fri, 04/04/2014 - 14:42 | 4625751 Mercuryquicksilver
Mercuryquicksilver's picture

I'm a pawn in the worlds largest chess match thats been pre-gamed on the worlds most powerful supercomputers.

Fri, 04/04/2014 - 14:46 | 4625770 Latina Lover
Latina Lover's picture

Blowbacks a bitch, isn't it, Nudelman?  Hope you keep your second passport close, lest you get run out of the USSA and have leave for that shining democracy in the south east Med.

Fri, 04/04/2014 - 14:51 | 4625801 Soul Glow
Soul Glow's picture

It's about to come down to how much gold a Nation-State can back their debt with.  Good luck Germany.

Fri, 04/04/2014 - 14:52 | 4625812 American Dreams
American Dreams's picture

Here comes the www.wocu.com

Know your enemy

AD

Fri, 04/04/2014 - 15:00 | 4625852 dontgoforit
dontgoforit's picture

Snarling, they are.  Here there be dragons!

Fri, 04/04/2014 - 15:10 | 4625906 AldousHuxley
AldousHuxley's picture

US wealth, status, power was largely uplifted by Rockefeller's standard oil.

 

US elites damn well know the power of energy wealth and that Russia is headed the same direction with natural gas US was 100 years ago.

 

 

 

 

Fri, 04/04/2014 - 15:21 | 4625945 Supernova Born
Supernova Born's picture

Cue Cliff Robertson dialogue from 3 Days of the Condor.

Higgins: "Not now - then! Ask 'em when they're running out. Ask 'em when there's no heat in their homes and they're cold. Ask 'em when their engines stop. Ask 'em when people who have never known hunger start going hungry. You wanna know something? They won't want us to ask 'em. They'll just want us to get it for 'em!"

Fri, 04/04/2014 - 15:24 | 4625980 Joe Davola
Joe Davola's picture

I'll bet things never went this way when our foreign policy "experts" handed in the position papers at Harvard.

Fri, 04/04/2014 - 15:28 | 4626009 AldousHuxley
AldousHuxley's picture

Putin is just poking fun at stupid fat Americans....

 

"Spend more time in the open, practice yoga, stick to food-combining diets, maybe watch some comedy sketch shows on TV"

 

One way to beat Putin's Russia is to deploy large amount of US consumers in Russia to spread blind consumerism.  

Fri, 04/04/2014 - 15:34 | 4626037 wee-weed up
wee-weed up's picture

 

 

Obozo:  You better not make me draw another red line... you'll be sorry!

Putin:  Fuck you, you little worm!

Fri, 04/04/2014 - 22:26 | 4627248 MontgomeryScott
MontgomeryScott's picture

We would personally like to thank Mr. Kissinger, Mr. Nixon, and the war-hawks that spent the treasury on that 'Vietnam thing', for this moment in history.  The OPEC accords were pure genius, and a distraction from the true state of financial affairs of the U.S. Gov. Inc.. As the dawn of the new era approaches, and the United States is all but dead now, we know that our goals are finally within our grasp and clearly acheivable. The progenitors of the 9/11 false flag are also to be congratulated for taking this in to an accelarated timeline.

Sincerely,

The Bilgerberg Attendees Association,

The CPUSA,

LUKOIL,

COSCO, AND,

Nancy Pelosi

Sat, 04/05/2014 - 00:35 | 4627411 crazyjsmith
crazyjsmith's picture

Emperor Putin  -  "I am thinking of going into Ukraine, and taking back Crimea - their contempt will not be tolerated"  

 

Darth Obama  -  "After the election, my lord, I will have more flexibility"  

 

Emperor Putin  -  "What will you deliver to me if I wait?"

 

Darth Obama  -  "How about the Planet Dollar, my lord? Let's say they've been......distracted"

 

Emperor Putin  -  "Deal Comrade - at that time, the mechanism should be operational"

 

Darth Obama  -  "If you invade now my lord, the drones in my sector will see up my skirt, and I won't get re-elected."

 

Emperor Putin  -  "We soon will deal with those Drones.  Patience my son."

 

 

And Scene...

Sat, 04/05/2014 - 07:52 | 4627749 onthesquare
onthesquare's picture

Momar and Sadam tried this shit and look where it got them.

Sat, 04/05/2014 - 12:35 | 4628072 Tall Tom
Tall Tom's picture

Vlad has a Nuclear arsenal. Muhammar and Saddam did not.

 

By the way. Being on the square is the basest form of human. If you are aware about the Knight's Templar, or, the Freemasons, it is an insult when someone calls you that.

Sat, 04/05/2014 - 13:29 | 4628191 it aint easy
it aint easy's picture

Not even being widows' sons helped M and S.. if they're really dead that is.

Sat, 04/05/2014 - 17:20 | 4628625 logicalman
logicalman's picture

Are you 'on the square' = are you a corrupt fuck.

I'd say that was an insult.

Fri, 04/04/2014 - 15:32 | 4626033 Keyser
Keyser's picture

Post Grad work as a flunky at the CFR for a decade, then if you can find your ass with both hands they let you sit at the big table. 

 

Fri, 04/04/2014 - 23:40 | 4627372 TheReplacement
TheReplacement's picture

Say what?  How can you believe this is an accident?  Explain why Obama struts around like he's won every round if he isn't successfully doing what he set out to do.  Also please explain why Putin didn't do the things he's done earlier?

You are playing poker and you don't know who the sucker is.  Do you really believe either Obama or Putin are personally in any danger due to all of this?

Sat, 04/05/2014 - 12:19 | 4628051 CuttingEdge
CuttingEdge's picture

Only "good" presidents get grassy knolls and bum theatre tickets.

Sadly, cunts like Obama see out their time and then make a small fortune prostituting themselves to every banana republic paying top dollar. The only difference between Obummer and Blair (his mentor), is that your guy won't have to travel much to whore himself - by the time he's done fucking up three years hence, you'll have the biggest banana state going.

Sat, 04/05/2014 - 17:21 | 4628626 logicalman
logicalman's picture

I'm a 'big' fan of Tony, too!

 

Sat, 04/05/2014 - 06:49 | 4627709 spine001
spine001's picture

Then you will loose your bet. Most science done at Harvard and other institutions never gets discussed by the MSM unless it fits the soundbites of the day. All scenarios have been discussed and presented, and this is a probable one. There are, many worse ones, including a regression to pre-industrial agricultural based life. Stone age regressiin of civilization.

Fri, 04/04/2014 - 15:12 | 4625924 SafelyGraze
SafelyGraze's picture

dear russia/perssia:

we have frozen all of your dollars-denominated asset

which you must continue to use them whilst trading with the each other

hugs,
the tri-lats translator

Fri, 04/04/2014 - 17:26 | 4626496 LawsofPhysics
LawsofPhysics's picture

Dear Tri-lats,

 What's a dollar?  we have been trading in other currencies/commodities since 2010.

Just out of curiosity, how did you acquire this address?

The East.

Fri, 04/04/2014 - 22:25 | 4627236 hobopants
hobopants's picture

The collapse of the dollar I can live with, it would be for the best in alot of ways. I'm way more worried that this nonsense is going to cause an all out war.

Fri, 04/04/2014 - 23:41 | 4627375 TheReplacement
TheReplacement's picture

How could it turn out any other way?

Sat, 04/05/2014 - 14:40 | 4628334 hobopants
hobopants's picture

peacefully? like when the soviet union fell in the early 90's? I know there is a bit of naivety to that statement but one can dream while preparing for the worst.

Sat, 04/05/2014 - 17:24 | 4628629 logicalman
logicalman's picture

By 'preparing for the worst', I take it you are grabbing yourself about 5gm of high quality heroin for the day you really want to get off the planet.

There are some scenarios you don't want to survive.

Sat, 04/05/2014 - 16:15 | 4628507 Rafferty
Rafferty's picture

I'm way more worried that this nonsense is going to cause an all out war.

 

Your dual citizens will decide if there's to be one and when it will take place.  and of course also select the enemies.  Listen for the sound of war drums on Capitol Hill and the MSM.

Sat, 04/05/2014 - 17:27 | 4628635 disabledvet
disabledvet's picture

http://en.wikipedia.org/wiki/The_Guns_of_August

The build up to this war is going on right before our very eyes...slowly, methodically and with determination. It's hard to argue that there is even the pretense of diplomacy at this point and since Ukraine is sovereign this is not about "red lines" but "trip wires."

http://en.wikipedia.org/wiki/The_Red_Badge_of_Courage
"the book never resolves the character's heroism defect."

Fri, 04/04/2014 - 18:47 | 4626707 dmpol
dmpol's picture

Friends, our presiden-guys are playing against each other. Connect to my cheer:
http://www.youtube.com/watch?v=4BEN4bn_iTk

Fri, 04/04/2014 - 19:38 | 4626835 palmereldritch
palmereldritch's picture

Dear US:

In Russia, dollar trades you

Fri, 04/04/2014 - 15:03 | 4625868 zerozulu
zerozulu's picture

RT.com/on-air/ has stopped working. Any idea why?

Fri, 04/04/2014 - 15:14 | 4625932 McMolotov
McMolotov's picture

American Exceptionalism.

Sat, 04/05/2014 - 18:09 | 4628699 sleigher
sleigher's picture

There has to be some people who just roam around on this site and junk posts for no reason at all.  Just because.  (it's ok, you can junk me too)

Fri, 04/04/2014 - 15:17 | 4625943 Dubaibanker
Dubaibanker's picture

No idea...but it's stopped working here too....perhaps some technical online issue? The videos on site are working though.

Fri, 04/04/2014 - 15:30 | 4626024 zerozulu
zerozulu's picture

Thanks, I thought THE breaking news is on.

Fri, 04/04/2014 - 15:29 | 4626018 PennilessPauper
PennilessPauper's picture

Maybe your government doesn't want you watching RT propagnada only the local governments propaganda?  War is probably close.

Fri, 04/04/2014 - 18:01 | 4626595 f16hoser
f16hoser's picture

Fuck You Obama! Shove your FIAT Paper Dollar up your FAGGOT ASS!!! Questions>

Fri, 04/04/2014 - 20:27 | 4626948 CheapBastard
CheapBastard's picture

Dollar's Days look numbered now. I hope I don't wake up some Monday morning to find it devalued 50% [or moar!]

...what'll become of us?!

Fri, 04/04/2014 - 22:19 | 4627231 StychoKiller
Sat, 04/05/2014 - 04:56 | 4627654 CuttingEdge
CuttingEdge's picture

What will become of us?

Venezuela on a seriously grand scale, methinks.

Sat, 04/05/2014 - 07:24 | 4627717 Kobe Beef
Kobe Beef's picture

Yugoslavia, or Four-Way Civil War: Africans vs. Aztecs vs. Yankees vs. Rebs.

When all the Dual-Citizens jump ship, you'll know the situation is no longer manageable.

Sat, 04/05/2014 - 16:21 | 4628516 Rafferty
Rafferty's picture

"When all the Dual-Citizens jump ship, you'll know the situation is no longer manageable."

 

That's the best possible advice.  Carefully note whether they start liquidating assets and/or using the Other Passport a lot more.  And act accordingly.  You won't go wrong.

 

 

Do NOT follow this link or you will be banned from the site!