De-Dollarization Spikes - Venezuela Stops Accepting Dollars For Oil Payments

Did the doomsday clock on the petrodollar (and implicitly US hegemony) just tick one more minute closer to midnight?

Source: The Burning Platform

Apparently confirming what President Maduro had warned following the recent US sanctions, The Wall Street Journal reports that Venezuela has officially stopped accepting US Dollars as payment for its crude oil exports.

As we previously noted, Venezuelan President Nicolas Maduro said last Thursday that Venezuela will be looking to “free” itself from the U.S. dollar next week. According to Reuters,

“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal.

Maduro hinted further that the South American country would look to using the yuan instead, among other currencies.

“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.

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And today, as The Wall Street Journal reports, in an effort to circumvent U.S. sanctions, Venezuela is telling oil traders that it will no longer receive or send payments in dollars, people familiar with the new policy said.

Oil traders who export Venezuelan crude or import oil products into the country have begun converting their invoices to euros.

 

The state oil company Petróleos de Venezuela SA, known as PdVSA, has told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner.

 

The new payment policy hasn’t been publicly announced, but Vice President Tareck El Aissami, who has been blacklisted by the U.S., said Friday, "To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar."

There is no major market reaction for now - a modest bid to Bitcoin and some weakness in EUR and Gold (seems someone wants this to look like nothing).

However, as Nomura debt analyst Siobhan Morden warns:

“You can say whatever you want for your domestic propaganda and make it look like you’re retaliating against the U.S.... This political posturing will only be to their detriment.”

So what happens if Europe also sanctions Venezuela? Will Rubles or Yuan... or Gold be the only way to buy Venezuela's oil?

*  *  *

This decision by the nation with the world's largest proven oil reserves comes just days after China and Russia unveiled the latest Oil/Yuan/Gold triad at the latest BRICS conference.

It’s when President Putin starts talking that the BRICS reveal their true bombshell. Geopolitically and geo-economically, Putin’s emphasis is on a “fair multipolar world”, and “against protectionism and new barriers in global trade.” The message is straight to the point.

“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

“To overcome the excessive domination of the limited number of reserve currencies” is the politest way of stating what the BRICS have been discussing for years now; how to bypass the US dollar, as well as the petrodollar.

Beijing is ready to step up the game. Soon China will launch a crude oil futures contract priced in yuan and convertible into gold.

This means that Russia – as well as Iran, the other key node of Eurasia integration – may bypass US sanctions by trading energy in their own currencies, or in yuan.

Inbuilt in the move is a true Chinese win-win; the yuan will be fully convertible into gold on both the Shanghai and Hong Kong exchanges.

The new triad of oil, yuan and gold is actually a win-win-win. No problem at all if energy providers prefer to be paid in physical gold instead of yuan. The key message is the US dollar being bypassed.

RC – via the Russian Central Bank and the People’s Bank of China – have been developing ruble-yuan swaps for quite a while now.

Once that moves beyond the BRICS to aspiring “BRICS Plus” members and then all across the Global South, Washington’s reaction is bound to be nuclear (hopefully, not literally).

Washington’s strategic doctrine rules RC should not be allowed by any means to be preponderant along the Eurasian landmass. Yet what the BRICS have in store geo-economically does not concern only Eurasia – but the whole Global South.

Sections of the War Party in Washington bent on instrumentalizing  India against China – or against RC – may be in for a rude awakening. As much as the BRICS may be currently facing varied waves of economic turmoil, the daring long-term road map, way beyond the Xiamen Declaration, is very much in place.

*  *  *

Having threatened China today with exclusion from SWIFT, we suspect Washington is rapidly running out of any great ally to sustain the petrodollar-driven hegemony (and implicitly its war machine). Cue the calls for a Venezuelan invasion in 3...2..1...!

Comments

ET (not verified) Wed, 09/13/2017 - 19:22 Permalink

Maduro has a death wish.

It's the only explanation.

But, seriously, this bus driver is destroying his country with Socialism.

giovanni_f TBT or not TBT Thu, 09/14/2017 - 02:42 Permalink

I am sure there is some underprivileged muslim/kurd/ukronazi/rohingya - like democracy-craving "minority" that can be constructed in Venezuela, coincidentally living on those vast oil fields (or are fishermen if offshore) that want to democratically secede but the dictator Maduro persecutes them and the only ones that help them are the NED, the US embassy, the CIA, Pentagon, state department and Victoria Nuland.The media in the West so far has given no attention to these crimes-aginst-humanity in Venezuela, but, hey, opendemocracy from Soros, couldn't you simply recycle that article about that funny "Democratic Federation of North Syria" and just replace same names with spanish sounding ones?

In reply to by TBT or not TBT

chubbar peddling-fiction Wed, 09/13/2017 - 20:27 Permalink

The only way to defang the US is to quickly dethrone the dollar. If the BRICS, et al, don't move quickly then a war will eventually start with Korea or some other trigger in the ME.I think that if they are going to do it (make the move to a gold backed or linked yuan, or whatever their plan) then they had better start making their move and hope it all comes cascading down quickly. If the dollar fails, the troops have to come home (I'm hoping). The US needs to take their medicine and not keep killing people around the world to maintain their hegemony.

In reply to by peddling-fiction

Implied Violins peddling-fiction Wed, 09/13/2017 - 21:38 Permalink

Anyone else here that thinks Maduro and Venezuela's 'social experiment' is being used as a 'model' for what the banksters foresee for humanity? I think he's a pawn, and getting Americans to accept - nay, ASK - for the loss of the dollar as world the reserve currency.

Of course, the USA has not been innocent with its campaign of divide and conquer...but the PEOPLE shouldn't have to suffer for the sins of the few in power. That is the game here, and we are being lead to ACCEPT this as 'penance' for the crimes of the elite.

In reply to by peddling-fiction

political_proxy (not verified) new game Thu, 09/14/2017 - 00:19 Permalink

The money changers aka the banksters, don't give a rat's ass who is or what is in DC.“Let me issue and control a nation’s money and I care not who writes the laws.” -Mayer Amschel Rothschild (1744-1812), founder of the House of Rothschild.

In reply to by new game

mkkby NoPension Thu, 09/14/2017 - 14:47 Permalink

Pretty fucking funny, isn't it? Last I heard Venezuela was in full hyperinflation mode. Because they no longer have enough oil to pay for their social programs. In short -- they're done. No longer a player in oil.

Now for chink land. Last I heard they still peg the yuan to the dollar. Ooopsie. No matter how much trade is done in yuan, it's really done in dollars. And that's exactly how they want it, because without the US consumer their economy goes back to ming dynasty times. And a billion starving people with a history of hanging their dear leaders.

In reply to by NoPension

GardenWeasel auricle Thu, 09/14/2017 - 00:47 Permalink

Pardon the expression, but it's different this time.  Iraq and Libya suffered because the Russians and Chinese still gave the US the benefit of the doubt, or they were giving them rope.  I think events in Syria should show what the new game is.  The US is done pushing around little guys.  If they want to take things by force, they are going to have to go thru the big boys.  I am certain Russia and China will stand behind Venezuela, and might have even encouraged them to be the first country to ditch the dollar.  p.s. - good to see you again, Boris.

In reply to by auricle

Killdo Pernicious Gol… Thu, 09/14/2017 - 18:26 Permalink

they actually live much better than we do in the USSA.At least here in Argentina- beautiful clean cities, very few homeless (and they are clean and not injecting heroin like the ones I see in hundreds in SF or LA)all my argentinean friends live better, have better houses, jobs etc, their kids are happier and better educated etc - than anyone I know in the US. They also have no college debt and healthcare is free even for foreigners

In reply to by Pernicious Gol…

Killdo ZorroHedge Thu, 09/14/2017 - 18:28 Permalink

they do shit their pants easily. that was one of my biggst surprises while living in the USSA over more than a decade - how cowardly in general and fearful of politicians and their imaginary masters Americans generally are. All talk and no balls mostly. I have maybe met a handful (if that) of brave Americans in 13 or so years I have sent here

In reply to by ZorroHedge