Oil Rich Venezuela Stops Accepting Dollars

Oil Rich Venezuela Stops Accepting Dollars

  • President Maduro ‘ Venezuela will create a basket of currencies to free us from the dollar,”
  • Oil traders ordered to stop accepting U.S. dollar in exchange for crude oil
  • Order comes following calls from Russia and China to find alternatives to current reserve system
  • U.S. Dollar accounts for two-thirds of global trade
  • Venezuela has over ten-times more oil than United States
  • Super powers are gradually turning to gold to avoid using world's main reserve currency
  • Are we seeing the beginning of the end for the U.S. dollar?


Source: The Burning Platform


The oil-rich country of Venezuela has stopped accepting the U.S. Dollar as payment for oil.

Last week President Maduro warned that the country would this week ‘free’ itself from the US dollar.

“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,”

Yesterday Venezuela temporarily suspended the sale of U.S. dollars through its Dicom auction system. This (and other moves) was in response to U.S. sanctions put in place by the Trump administration.

Trump claims the sanctions are there to punish the country's autocratic leaders. Maduro claims Washington's move was part of an “economic war”.

This morning The Wall Street Journal reports that the Venezuela is already telling oil traders not to accept the US currency.

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 decision to suspend dollar trading on Diacom and to no longer accept the the U.S. currency for oil is potentially a major blow for the world's reserve currency.

Venezuela's decision comes at a time when other countries (namely Russia and China) are already finding ways to avoid using the U.S. dollar.

History shows us that currency domination does not last forever. Are we seeing the cracks in the latest global currency reserve system? Will those who seek to come out of the shadows and force of the US begin to build up their own systems to survive outside of the U.S. dollar and how important will gold be?

How important is oil to Venezuela

According to OPEC oil accounts for 95% of Venezuela’s exports. The country has ten times more oil reserves than the US, and nearly 70 billion more barrels than Saudi Arabia.

However, because of its heavy reliance on oil as an export this means it is heavily reliant on the price. Since President Maduro came to power the oil price has crashed. Inflation is out of control and the bolivar is practically worthless: $1,000 of local currency bought in 2013 would today be worth $1.20.

The Trump administration has made it clear that it will achieve a regime change through the destruction of what is an already severely  debilitated Venezuelan economy. Prior to the latest round of sanctions one could see a way out for Venezuela but not anymore.

It is clear that Venezuela will have to seek outside help in order to survive. That help will no doubt come from the other countries that are fed-up of or suffering as a result of U.S. dollar hegemony.

China is set to launch a crude oil futures contract priced in yuan and convertible into gold. This will give the likes of Russia and Iran a means of bypassing both the U.S. Dollar and sanctions. Now, it may also be an option for the world's largest oil producer.

By making this convertible into gold it means countries are no longer held hostage by foreign currencies. Gold is a borderless currency which speaks everyone's language.

Liberate us from the U.S. dollar

The new policy on oil payments has not been officially announced but it comes less than a week after both President Maduro and Vice President Tareck El Aissami called for liberation from the US dollar.

El Aissami (blacklisted by the US)  has called for other sovereign currencies to be used. On Friday he said, “To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar.”

In an hour-long address to a new legislative body last week, President Maduro said, “If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,”

As mentioned in the introduction super-powers such as China and Russia are keen for countries such as Venezuela to join them in avoiding the U.S. dollar.

Plans have gone beyond just negotiating around U.S. sanctions and are now in full infrastructure building mode. Russia, China and Iran are all setting up a new financial system that will, in Putin's words, focus on a “fair multipolar world”, and “against protectionism and new barriers in global trade.”

“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.

Excessive domination

Oil rich nations are certainly weary of the U.S dollar's excessive dominance over trade. Currently they have little choice over which currency to use.

One theory put forward in William R. Clark’s book Petrodollar Warfare is that the U.S. led wars 'are fueled by the direct effect on the U.S. dollar that can result if oil-exporting countries opt to sell oil in alternative currencies. For example, in 2000, Iraq announced it would no longer use U.S. dollars to sell oil on the global market. It adopted the euro, instead.' 

Even if countries are not oil-rich or fearful of the gun-wielding powers of the U.S.  they would still like the option to decide which currencies they trade in. Trading in the U.S. dollar can make life very difficult elsewhere.

When using the U.S. dollar foreign banks are required to clear payments through the US, even if they are doing business elsewhere. This can't just happen,  a dollar clearing licence from US authorities is required. This can also be quickly taken away if Washington decides it wants to punish you somehow.

Will the euro want them? Gold will

In the short-term, the solution for Venezuela might not be as simple as accepting the euro.

Much of the current plan assumes that Europe will not sanction Venezuela. Should they also take a similar stance to the US then Maduro’s nation will be left with a choice of Rubles, Yuan and, of course, gold.

This is where Russia, China and Iran will certainly be on board. We know that all three countries hold huge amounts of gold and are very open to using it for trade purposes.

Jim Rickards explains:

China, Russia and Iran are coordinating a new international monetary order that does not involve U.S. dollars. It has several parts, which together spell dollar doom. The first part is that China will buy oil from Russia and Iran in exchange for yuan.

The yuan is not a major reserve currency, so it’s not an especially attractive asset for Russia or Iran to hold. China solves that problem by offering to convert yuan into gold on a spot basis on the Shanghai Gold Exchange.

This marks the beginning of the end of the petrodollar system that Henry Kissinger worked out with Saudi Arabia in 1974, after Nixon abandoned gold.

This is not some back-of-a-beer-mat plan. At last week's BRICs summit members expressed full support to China moving away from the U.S. Dollar.

This is particularly pertinent at a time when U.S. Treasury Secretary is threatening to cut China out of the U.S. Dollar system

If China doesn’t follow these sanctions, we will put additional sanctions on them and prevent them from accessing the U.S. and international dollar system. And that’s quite meaningful.

But how meaningful is it when the Asian super-power is putting infrastructures (and deals) in place to trade in gold. Don't forget, this is the world's biggest buyer of gold. They will unlikely need the U.S. dollar forever.

How will this unfold?

Who knows how this will unfold. But what is clear is that the U.S. has been relatively short-sighted with how it has used the power of its currency.

As it has sought to sanction, threaten and bully countries into the using its currency, others have been slowly building up their gold reserves and infrastructure systems. This means that the U.S. dollar sanctions will soon not mean as much as they once did.

It is relatively easy to put controls on a country's currency, but it is very difficult to do so with gold.

Whilst Venezuela is no doubt struggling with the impact of the sanctions from Washington they do have support from those elsewhere and that support is very interested in physical gold.




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peddling-fiction . . . _ _ _ . . . Thu, 09/14/2017 - 10:07 Permalink

Syria not giving in was  a good thing.However Venezuela sits on top of 300B barrels of proven oil reserves.When Venezuela, holding the largest known oil reserves says buy-bye to the US Dollar, it is a macro event that eclipses Syria.Now if Saudia Arabia also follows suit, the petrodollar is over.It may be over regardless of what Saudia Arabia does, because I believe war is around the corner in the Middle East.

In reply to by . . . _ _ _ . . .

garcam123 fulliautomatix Thu, 09/14/2017 - 16:05 Permalink

Russia has their hand in there right now.  They need to drop 5000 nRussian troops in there right now and DARE the thieving cocksuckers to do something stupid, especially if they have some S400s on the ground........That would make my day!  And then an agreement with Mexico with wargames in the desert just south of the border, Russian and Chinese in training manuvers with the Mexican Military and a few S400s just south of TJ..........level the field!

In reply to by fulliautomatix

el buitre vollderlerby Thu, 09/14/2017 - 10:53 Permalink

Of all the trouble spots on the planet created by Exceptionalstan to maintain dollar hegemony, Venezuela is the most likely for a US invasion, as it fits all the perogatives, especially that of a militarily weak country.  However, I do not think it is going to happen, nor do I see carpet bombing with humanitarian love bombs as in Libya.  I think they will stick to economic warfare and Soros inspired color revolutions.  Rosneft, the Russian oil company, is negotiating to buy up most of the Venezuelan oil and resell it, mainly in yuan, which the Russians can now conveniently convert to gold if they wish.  And the Deep State is not going to do shit to Russia.  The Deep State has nicknamed Russia's most powerful ICBM as Satan.  As this is the name of the deity they worship, it shows a lot of respect for its destructive capabilities.  I am sure that Putin has put sleepers in all the DUMBs that the Deep State elites intended to hide out a strategici nuclear war.  Some of them have already been taken out by nukes, including the huge one in Virginia according to Jim WIllie.  As the entire world turns on this satanic scum, they are more and more hamstrong.  However, I would not rule out the Samson option, not only for Israhell, but the entire western Deep State.  The idea of losing power, and maybe seeing justice as opposed to Just-US, may be just too much for them to bear.  Fuckem.

In reply to by vollderlerby

LawsofPhysics Thu, 09/14/2017 - 09:18 Permalink

Blah, blah, blah, fiat is fiat is fiat...wake me when just one of these corrupt governments backs their nation's currency with something fucking real......never gonna happen "folks".  WWIII will happen first."Full Faith and Credit" What is Venezuela accepting now?  Chinese Yuan? LMFAO!!!Good luck with that! 

el buitre FreeEarCandy Thu, 09/14/2017 - 11:05 Permalink

Based on the idea that the Comex and LBMA can naked short paper gold forever and conflate that with the price of phyz.  The days of meaningful paper gold can be counted in months.  Thus your whole idea is worthless.  China and Russia have two ways to crush the PM negative bubble price surpression.  One is to raise the price of gold over the Comex and suck out the little phyz stock that remains.  The other is just to refuse to sell real stuff for Exceptionalstani electrons.  I think they have chosen the latter.

In reply to by FreeEarCandy

Blacksheep She… Thu, 09/14/2017 - 10:37 Permalink

Why did we put sanctions on them in the first place? We need to butt out of everyone else's business and take care of our own problems. Wow I hate my government more and more each and everyday!

TRM Thu, 09/14/2017 - 10:42 Permalink

Great climate, great soil, great fresh water resources, great energy reserves. So why is Venezuela such a basket case? Oh yea, they've been run by socialist idiots for almost 20 years. If only they hadn't bet the farm on $100/B oil lasting forever and implemented some economic reforms but it's always easy to get people to vote for you when you promise them free shit. Russia was hit with much worse sanctions and yet despite a much worse climate is now exporting foods. Venezuela pissed away such a great chance to be truly independent but "Live and Learn" I guess. Or "Live and Repeat". Their choice. 

William Dorritt Thu, 09/14/2017 - 10:45 Permalink

No matter what Venezuela accepts for their oil, they will still be collapsing and bankrupt on the verge of starvation. The US needs to green light Brazil and Columbia moving in and arresting or eliminating the Cuban backed terrorist Govt. Russia and Iran won't be buying any oil, they are sellers. What does China have that Venezuela needs, manufactured goods that Venezuelans can't afford?

el buitre Thu, 09/14/2017 - 10:56 Permalink

I basically agree, but one should also bear in mind that Venezualan oil is the most heavy and sour on the planet and there are currently few refineries that can deal with it.  One advantage to selling it through Rosneft is that they have the finances and capabilities to blend it sweeter.

zuuma el buitre Thu, 09/14/2017 - 13:09 Permalink

Cheifly, US refineries in the Houston/ Galveston area. A couple in China, since their oil is very heavy,as well.Maybe the Canada tar sands oil will be a better deal after Keystone comes online.And if the Estimates of total recoverable oil in the USA of 264 Billion Barrels (30 billion hahahaha  1970 estimates?)http://fortune.com/2016/07/05/oil-reserves-us/prove even half true, we'll move onto other things before the oil runs out.Veniza-who? 

In reply to by el buitre

Jo A-S Thu, 09/14/2017 - 11:15 Permalink

In Fig 1 - what is this UN so-called global currency?  The one that follows the dollar?  I don't think that the dollar, as an international currency, is dead, yet.  Indeed, I think that I'd rather trust the UK £ better than other currencies - and definitely don't trust the Euro.......

Umh Thu, 09/14/2017 - 11:50 Permalink

For a very long time the US has imported goods bought with dollars which are then made less valuable by inflation. It is a powerful tool that is easy to overlook.

ali-ali-al-qomfri Thu, 09/14/2017 - 12:04 Permalink

We have front row tickets to witness the currency turnover, an historical event and purely man made and in an era where we use Trillions in speaking of debt.I don't know if the Mayans were tracking this but it seems this comes round and round andits comin' right at us!  

GuestAug Thu, 09/14/2017 - 12:31 Permalink

In the long run, the end of petro-dollar will be a blessing for most Americans.  The only reason we lost so many jobs is that the dollar is 50% or more over-valued relative to other currencies.  This over-valuation is caused by the artificial demand for dollars by foreigners who need them to buy oil and other resources.  Once this goes away, the dollar will fall relative to other currencies, and the jobs will start coming back.  And this is exactly how Trump will fulfill his promise of "bringing the jobs back."  So expect lots of shouting from Trump against de-dollarization, but no real action to prevent it from happening. Maduro is safe.

CanadaGoose Thu, 09/14/2017 - 15:51 Permalink

USA: .".. oh look .... can it be that there are al queda/isis terrorists in Venezuela?  Is Venezuela hiding WMDs?   Time to send in the MIC to save Venezuela from that!"