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The PetroYuan Cometh: China Docks Navy Destroyer In Iran's Strait Of Hormuz Port
Since China fired its first 'official' shot across the Petrodollar bow a year ago, there has been an increasing groundswell of de-dollarization across the world's energy trade (despite Washington's exclamations of 'isolated' non-dollar transactors). The rise of the PetroYuan has not been far from our headlines in the last year, with China increasingly leveraging its rise as an economic power and as the most important incremental market for hydrocarbon exporters, in the Persian Gulf and the former Soviet Union, to circumscribe dollar dominance in global energy - with potentially profound ramifications for America’s strategic position. And now, as AP reports, for the first time in history, China has docked a Navy Destroyer in the Southern Iranian port of Bandar-Abbas - right across the Straits of Hormuz from 'US stronghold-for-now' Bahrain and UAE.
The rise of the PetroYuan has not been far from our headlines in the last year:
China Fires Shot Across Petrodollar Bow: Shanghai Futures Exchange May Price Crude Oil Futures In Yuan
Guest Post: From PetroDollar To PetroYuan – The Coming Proxy Wars
The Rise Of The Petroyuan And The Slow Erosion Of Dollar Hegemony
And now, as AP reports, for the first time in history, China has docked a Navy Destroyer in a Southern Iranian port of Bandar-Abbas - right across the Straits of Hormuz from 'US stronghold-for-now' Bahrain and UAE.
Adm. Hossein Azad, naval base chief in the southern port of Bandar Abbas, said the four-day visit that began Saturday saw the two navies sharing expertise in the field of marine rescue.
"On the last day of their visit while leaving Iran, the Chinese warships will stage a joint drill in line with mutual collaboration, and exchange of marine and technical information particularly in the field of aid and rescue," said Azad.
The report said the destroyer was accompanied by a logistics ship, and that both were on their way to the Gulf of Aden as a part of an international mission to combat piracy.
...
Last year a Russian naval group docked in the same port on its way back from a Pacific Ocean mission.
The move is also seen part of off efforts by Iran to strike a balance among foreign navies present in the area near the strategic Strait of Hormuz, the passageway at the mouth of the Persian Gulf through which a fifth of the world's oil is shipped.
U.S. Navy's 5th Fleet is based in nearby Bahrain, on the southern coast of the Gulf.
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Here's why it matters...
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History and logic caution that current practices are not set in stone. With the rise of the “petroyuan,” movement towards a less dollar-centric currency regime in international energy markets—with potentially serious implications for the dollar’s broader standing—is already underway.
As China has emerged as a major player on the global energy scene, it has also embarked on an extended campaign to internationalise its currency. A rising share of China’s external trade is being denominated and settled in renminbi; issuance of renminbi-denominated financial instruments is growing. China is pursuing a protracted process of capital account liberalisation essential to full renminbi internationalisation, and is allowing more exchange rate flexibility for the yuan. The People’s Bank of China (PBOC) now has swap arrangements with over thirty other central banks—meaning that renminbi already effectively functions as a reserve currency.
Chinese policymakers appreciate the “advantages of incumbency” the dollar enjoys; their aim is not for renminbi to replace dollars, but to position the yuan alongside the greenback as a transactional and reserve currency. Besides economic benefits (e.g., lowering Chinese businesses’ foreign exchange costs), Beijing wants—for strategic reasons—to slow further growth of its enormous dollar reserves. China has watched America’s increasing propensity to cut off countries from the U.S. financial system as a foreign policy tool, and worries about Washington trying to leverage it this way; renminbi internationalisation can mitigate such vulnerability. More broadly, Beijing understands the importance of dollar dominance to American power; by chipping away at it, China can contain excessive U.S. unilateralism.
China has long incorporated financial instruments into its efforts to access foreign hydrocarbons. Now Beijing wants major energy producers to accept renminbi as a transactional currency—including to settle Chinese hydrocarbon purchases—and incorporate renminbi in their central bank reserves. Producers have reason to be receptive. China is, for the vastly foreseeable future, the main incremental market for hydrocarbon producers in the Persian Gulf and former Soviet Union. Widespread expectations of long-term yuan appreciation make accumulating renminbi reserves a “no brainer” in terms of portfolio diversification. And, as America is increasingly viewed as a hegemon in relative decline, China is seen as the preeminent rising power. Even for Gulf Arab states long reliant on Washington as their ultimate security guarantor, this makes closer ties to Beijing an imperative strategic hedge. For Russia, deteriorating relations with the United States impel deeper cooperation with China, against what both Moscow and Beijing consider a declining, yet still dangerously flailing and over-reactive, America.
For several years, China has paid for some of its oil imports from Iran with renminbi; in 2012, the PBOC and the UAE Central Bank set up a $5.5 billion currency swap, setting the stage for settling Chinese oil imports from Abu Dhabi in renminbi—an important expansion of petroyuan use in the Persian Gulf. The $400 billion Sino-Russian gas deal that was concluded this year apparently provides for settling Chinese purchases of Russian gas in renminbi; if fully realised, this would mean an appreciable role for renminbi in transnational gas transactions.
Looking ahead, use of renminbi to settle international hydrocarbon sales will surely increase, accelerating the decline of American influence in key energy-producing regions. It will also make it marginally harder for Washington to finance what China and other rising powers consider overly interventionist foreign policies—a prospect America’s political class has hardly begun to ponder.
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Are the Chinese resuming where Admiral He left off ?
See http://andreswhy.blogspot.com/2010/10/burning-of-fleets.html
"On the road to Bandar Bay
Where the Chinese flotilla lay
And the dawn comes up like thunder
Out of Bagram not far away."
"Come you back you 'Merican sailor
But don't go all the way
When you come back to Bandar Bay
Don't let them know you're gay"
First Russia raises itself up on its hind legs and has the unmitigated gall to speak and act against the petrodollar. Then China does the same. These attacks may not bugsplat the petrodollar overnight, but they are increasingly potent nonetheless, and they do spell doom for the petrodollar.
So the U.S. strategy of acute strangulation of the Russian finance and economy before Russia can garner more powerful allies into an anti-petrodollar axis is not going to be a good enough strategy.
The U.S. cannot attack Russia militarily - they will be met fairly soon by tactical nukes.
So they will have to expand their financial and economic strangulation strategy to China, else kiss the petrodollar goodbye.
But....what a risky strategy that will be! China has options against the dollar if it is provoked too far. The more I think about this global situation, the more I come to the conclusion that we are indeed in WWIII already, but the weapons are predominently financial, and so far, secondarily military in nature.
Historians are going to look back and say that WWIII was an entirely new kind of world war and that it did begin in the spring of 2014, after which all the world's powers began choosing sides.
This is a cat fight.
It is USA / EU against BRICS.
The first want to flood seconds with paper money.
The ancient Chinese and Russians want backed by gold and by producing physically as food, minerals and services.
The balance is broken and you're right, even the Catholic Pope has said we're in the third world war.
Few realize the extreme gravity today.
Congratulations!
Your analysis is correct.
:-)
Another thing, no use storing food and water, it just adds a little more agony when the shit grab.
http://www.amazon.com/Currency-Wars-Making-Global-Crisis/dp/1591845564
A tweet today from the Author..
At #JFK flying to #Tampa to meet with elements of US Special Operations Command from MacDill AFB on facets of #FinancialWar. #TipOfTheSpear
The war you write about, WWW, began a lot earlier than 2014.
It began when the pact was made by whoever controls world oil thru derivatives none of us have ever seen and the rotted hydrocarbon infested land owners was made to stifle ALL other potential renewable sources of energy upon which our machinery of all types can run.
By now, without a conspiracy, or a "Coincidence of Interests" if conspiracy is too strong a word to digest, our tractors, the Porsche, and motorbike all over the entire world would be operating on cheap renewable energy, with non-combustion engines, and the sheiks would be starving, in the dark, living in camel skin tents, eating sand for their breakfast; Boron and Mobil executives and superwealthy board members would be clerks at Wal-mart.
Drake's discovery in Oil City Pennsylvania would be an ancient footnote in a pre 50s text, and our support for our 51st state, Israel, would be superfluous.
This contrived dependence on a finite flow of slick black lube will be looked upon as the most devastating assault on ourselves, a global suicide.
Helas, d'herblay,
"'The moving finger writes and having writ moves on."
Fat lady is still singing, but not for much longer.
An American, not US subject.
It's about time someone showed up to help the 7th Fleet!
The USA should prolly start their next war with a country lots weaker than Iran. And start bombing a country with lots weaker buddies, too.
First off, made in China.
Second, Chinese military commandars are bribed. They are morons waiting for some commands from the top.
These are no more than sitting ducks waiting to be disposed.
Meanwhile the Yuan is still pegged to the US$ ... - Walking Chair or Baby Walking Chair?
Speaking of warships, who'd a thunk it?
MOSCOW, September 22. /ITAR-TASS/. Russia can do without French-built Mistral-class helicopter carriers whose delivery has been suspended over Ukraine, Deputy Prime Minister Dmitry Rogozin said in Sunday Evening with Vladimir Solovyov TV programme.
He also said that statements from France that a contract could be cancelled with the ships turned over to somebody else, were unlawful as one third of that ship was Russian-made. “The stern section of Mistral was made at Baltic Shipyard in St. Petersburg. That is why if they want to keep the ship, we will have to tear away its stern section and get it back to use it in other ships,” Rogozin said.
http://en.itar-tass.com/russia/750613
Rogozin has way with words.
The senior political class in America more than "pondered" the Yuan becoming reserve currency and petroyuan around the mid 90's. Part of the job of reserve currency is global policeman. Few people will follow the trail in how the world really works.
We'll see lots of media that eventually will be talking about China being the global bully and people will eat it up and have meaningless debates about what to do about it. And no, all those dollars aren't going to rush back to US causing hyperinflation.
The IMF renonimated there dollar holdings to Yuan with a stroke of a banking pen. However, the US can't just print at will anymore and have other countries absorb some of that inflation. It means deficits will definately matter.
The biggest politico-economic blunders based on greed was not rebalacing trade around 2005 instead of around 2012. The housing bubble and credit/debt binge was to offset the declining household income and .gov revenues from shipping the productive capacity/jobs to China. Everything else is media hype and noise.
I am glad China is stepping up to its global policeman role. We in America are war weary and broke and have much to fix in the domestic economy. This police state shit has definately got to go if confidence is to be restored.
You sir, have no clue. Stroke of a pen? Greed, bubble, binge, shipping media hype? Get real...
Nixon's panic move from gold to petro inc., thanks to zio directives, and the zionist secret moves made us all vulnerable to collapse from within. Let the chips fall where they may...
Um, Nixon taking us off the gold standard had nothing to do with zion. In fact, De Gaulle was demanding settlements in gold, and the depletion of the gold in our 'treasury' was becoming dangerously close to the point that we couldn't deliver. Nixon broke that gold standard as a result and we had the stagflation of the 80's. A lot of other things happened that could have put us back on the gold standard, but congress was too busy ignoring the social security crisis of today.
Can't wait for Monday when the ZH Weekend Nazi fanboys go back to their jobs delivering pizzas to rich suburban Jews, who are all smarter than these frustrated footsoldiers of the revivified master race.
This needs no translation:
http://www.youtube.com/watch?v=Je2BH4yGOWI&src_vid=c9oPpNkI9r4&feature=i...
Kkkkkkkkkkkkkkkkk!
SO much win - it's all the noose fit to print!
a strait jacket tightens on the west
Stramge that people can't buy and sell as they please.
http://news.yahoo.com/hong-kong-students-boycott-classes-democracy-battl...
HK'ese have moar balls then the merikan Sheeples, that's for sure.
I wonder if Chinese factories can mass produce drones of the type captured by Iran a couple years ago?
Jes tryin t'keep deh horn free a pirates, cowboy.
NOD vs. GDI
I'm going to go play Tiberian Sun for a few weeks and get back to all you bitchez later.
Note the presence of a "logistics ship" in this and all other Chinese naval deployments?
The logistics ship is actually a repair vessel for when the creaky old ex-Soviet mothball fleet refugee blows a vacuum tube or the coal shovel breaks.
Also note that the Iranian and Chinese navies are practicing joint maritime rescue procedures. Good idea in case they decide to get lippy with the USN. Joint maritime rescue will be high on their list of mission profiles.
"According to Mark Gaffney: 'At the time of the Falklands war the Argentine air force possessed only five Exocets, yet managed to sink two ships. With enough of them, the Argentineans might have sunk the entire British fleet, and won the war.'
"By contrast, the Iranians, cognizant of their defeat at the hands of the Iraqi and US forces in 1987-88, aware of the twin threat from Israel and the US, had focused heavily on defensive weaponry, supplied to them by Russian and Chinese manufacturers.
'The Russian SS-N-22.Sunburn (Moskit), which technical journals and experts have termed the most effective and lethal anti-ship weapon extant, is far cheaper to produce than a fighter plane or a missile destroyer, cruiser or aircraft carrier,' wrote Gaffney before the war. To make matters worse for US Navymen, the Russians provided the SS-NX-26 Yakhonts anti-ship missiles to Iran, reported to possess Mach 2.9 speed and a range of 180 miles.
The width of the Persian Gulf? 100-180 miles.
The immediate closure of the Persian Gulf to oil tankers from six nations provided a huge boost to peace advocates. By the second day of the war with Iran, with US Navy ships ablaze and sinking, with dire forecasts of worldwide fuel shortages, with gas prices spiking at $10 a gallon in some places, with increasing calls for impeachment appearing in the mainstream media, with environmentalist decrying the spread of radiation from the bomb blasted atomic sites in Iran, suddenly the neocon-sponsored war with Iran no longer seemed like such a good idea."
Aftermath: Day 2, the War With IranUS-Iran War-- Day One.
American data weaponry infects every copy of Islamic Babes on Parade e-mail and turns every Iranian weapon control system into a poorly-operating version of Space Invaders. While frantic Iranian technicians try to decrypt the scrambled phone numbers included in the Islamic Babes on Parade contact forms, American stand-off assets flatten all land and sea-based launch platforms except for one, which manages to launch a single Sunburn towards the USS Ronald Reagan carrier battle group-- which dies in a hail of concentrated CIGS fire before it can find a target.
Gas prices go crazy except for this one particular country which happens to be moving ever closer to energy independence and, by chance, also holds the one and only reserve currency. USA prints some extra EBT Fuel Bucks to cover the temporary spike while China sees its fuel import needs quintuple in price and drop in delivered quantity by 80%.
The first surrender offer is forwarded from Beijing early on Day 3, much to the surprise of its Iranian clients-- who thought they were kicking ass and taking names on the Great Satan.
Waiter, I'll have what tarabel is having. Except don't put that little umbrella in mine.
It's too fruity.
Hey, where the fuck is yakhont.
Haven't heard from him since Thursday.
On one of his binges, no doubt. Probably face first in a bowl of borscht.
His speed may be Mach 2.9, but he drinks at Mach 5.
"Who wins, in a possible war with Iran? More importantly, who loses?
The much predicted, much feared and, in the case of the corporate-controlled US mainstream media, much ballyhooed war with Iran, will feature a long list of winners and a longer list of losers.
Should the war become protracted (longer than one or two days), the perceived "winners" may eventually become the losers, while the list of losers will grow ever longer.
WINNERS:
1.Neocons, especially the embattled President and V.P.
2. Pentagon warhawks
3. Defense industry
4. Oil Industry
5. Christian Right
6. Zionists
7. Wall Street Insiders
8. Security Agencies
9. China
10. Russia
LOSERS
1. Iranian citizens
2. US citizens
3. Israeli citizens
4. British citizens
5. US taxpayers
6. Descendants of All of the above
7. US economy
8. US dollar
9. US Bill of Rights
10. US Republic
With every passing day, the world map looks more and more like a game of Risk, or Axis and Allies.
Of course, this means whoever controls Australia will likely win.
Zero coverage in ZeroHedge about Sunday Peace Marches in Russia...and in other parts of world.. it doesn't suit for Putin regime propoganda channel.
http://youtu.be/iI7SDN8lrfc
http://youtu.be/8gkrhbQ7mqs
http://youtu.be/C_c7Nxnnhf4
viedoklaizi_dirsa earned another four gryvnia for saying:
Probably because it was an insignificant non-event, as explained here:
http://vineyardsaker.blogspot.com/2014/09/september-21-ukraine-and-russi...
But hey, keep spreading your cheap uninspired propaganda if it affords you a few lumps of coal. I'd hate for you to freeze to death this winter, because you provide a laughter or two like a trained monkey.
Ah, cannot downvote you but in my estimation you have now crossed the line of humour vs truth. I used to enjoy you and Akaks's exchanges but now I see your blind side. Too bad. You had potential. Now just dust.
Glad you posted this. I doubt the ZH Russia first propagandists and their cohorts will cover this. Too uncomfortable for the recidivist leftists on this blog.The little colonal has got a problem, internal not external. Perhaps he is playing chess with the wrong opponent.
I actually see more bystanders watching the protests than actual protesters. Good that Russia allows pacifists to interpret annexation after a vote, anyway they wish. Global warming demonstrations bring out more people than this.
ignore
cos what I saw was lies
there was no "tens of thousands"
not even hundreds...police said not thousand total on street which most is crowd gawking.
don't get your ignorant hopes up...
from media fabrications for gullible like you...
The protest in Moscow will be no more productive than the Climate March in NYC, and it was far less attended..
Unless the Moscow march was organized by Victoria Nuland.
In that case, all bets are off.
Paraphrased from, "The Graduate", starring Dustin, and Anne:
"One word, son: Oil".
https://www.youtube.com/watch?v=PSxihhBzCjk
i thought it was plastics?
"paraphrased"
N'EST CE PAS?
(plastics are not possible without oil)
Not true, you can make plastics from hemp oil. But I digress.
There are more profitable derivatives.
3 Days of the Condor
adrian peterson is getting screwed.
I cannot fathom how shitty that destroyer is constructed out of shitty materials. And how poorly those little guys are trained in operating it. Seems fitting they would go to a fucktarded country of backwards satan worshippers.
[Ignore]