Maduro Visits Putin, Proposes Global Oil Trade In Rubles, Yuan

Three weeks after the US imposed financial sanctions on Venezuela in an effort to cripple its economy and choke the Maduro regime, which in turn prompted Caracas to announce it would no longer receive or send payments in dollars, and that those who wished to trade Venezuelan crude would have to do so in Chinese Yuan, today during an energy summit held in Moscow, Venezuela's president Nicolas Maduro proposed to expand his own personal blockade of the US, by proposing that all oil producing countries discuss creating a currency basket for trading crude and refined products. One which is no longer reliant on the (petro)dollar. 

“Developing a new mechanism of controlling the oil market is necessary,” Maduro said on Wednesday at the Russian Energy Forum, being held in Moscow this week.

Quoted by RT, Maduro also blamed trade in crude oil paper futures as having an adverse impact on the oil market, which has undermined attempts by OPEC to stabilize prices. To counteract such "speculation", Maduro proposed an alternative currency basket, one which is based not on the world's reserve currency but includes the yuan, ruble, and other currencies, and which will mitigate the alleged adverse impact of futures trading.

 

 

Maduro's proposal is merely the latest not so veiled hint at dedolarizing the global financial system by bypassing the petrodollar entirely, and rearranging a new currency basket determined by the world's biggest oil producer, and largest oil importer.

Of course, Maduro is merely piggybacking on what China may already have in the works: recall that a month ago, the Nikkei Asian Review reported that China is preparing to launch a crude oil futures contract denominated in Chinese yuan and convertible into gold, potentially creating the most important Asian oil benchmark and allowing oil exporters to bypass U.S.-dollar denominated benchmarks by trading in yuan.

Maduro also insisted that Venezuela is dealing with its debt to Russia, currently in the billions, and that Rosneft's deal with Venezuelan state oil producer PDVSA is “subject to negotiation.” “We fulfill all the obligations to Russia. If we get more favorable terms for restructuring the debt, this will be the result of a deal between the two governments,” said Maduro. It was unclear how Putin felt toward said proposal. 

Maduro also complained that US sanctions make it difficult to negotiate the debt issue with American debt holders (something the US is well aware of). In addition to switching to a Yuan-based basket...

... Caracas has been framing a plan to deliver its crude to alternative markets should the White House impose sanctions on trading the country's oil, Maduro said in response to a question on the possibility of PDVSA's default. “Venezuela has plans A, B, C, and others. There are other international companies interested in buying oil and refined products. We will create the best terms for them,” he said.

It remains to be seen if a last minute agreement by Russia and China to bailout Venezuela by revoking some or all of the petrodollar's reserve currency privileges, is in store. Needless to say, such a development would be the biggest shock to the global monetary system since Nixon killed the gold standard.

Comments

NoDebt Deathrips Wed, 10/04/2017 - 22:55 Permalink

The reason to do this is because they are going to default on every dollar-denominated loan.  They will be cut off from dollars.  That Maduro would shift from dollars to ruble/yen in such a situation is about as surprising as the sun coming up tomorrow.  Now let's see if they extend him credit to continue his socialist utopia a while longer.  I doubt it.  I think it will be "cash and carry" terms.  Just that the cash will be yuan/ruble. 

In reply to by Deathrips

zzzz88 Wed, 10/04/2017 - 22:18 Permalink

once dollar is not a reserve currency, or even not the #1 reserve currency, usa will decay much much faster.and it seems sooner than most of us can imagine

aurum4040 johand inmywallet Thu, 10/05/2017 - 08:03 Permalink

Wars have been fought, leaders have been killed, governments overthrown, gold has been manipulated, oil spickets have been turned on, financial crises have been created all in the name of propping the dollar and lowering interest payments. Who has a worse debt situation, the US or China while considering population and humanitarian needs? Tough question. 

In reply to by johand inmywallet

VideoEng_NC Wed, 10/04/2017 - 22:33 Permalink

No credit needed if Russia literally pulls the oil out of the ground via contracts & ships it home.  Have a real concern that over the last 6 yrs or so, our previous adminstration has severely underestimated Putin in world affairs.  He was literally written off during the 2012 election & I'm sure he just smiled realizing his prey doesn't see the bear through the trees.  If he solidifies his position in the Middle East it will give hime the captial to pull the oil out of Venezuela oout of spite. He didn't meddle in our election because he doesn't need US.

Son of Captain Nemo Wed, 10/04/2017 - 23:00 Permalink

To KoTex Tillerson and the velvet hammer called the U.S. MIC you use to "extract it" on this announcement along with everything else you are losing in Iraq, Syria, Libya, Yemen and Afghanistan...

"Nail"!... Meet "Coffin"!

cherry picker Thu, 10/05/2017 - 00:02 Permalink

When the dollar is no longer kingThe USA will feel a hurt it has not felt since the great depression or maybe worse.This can be fixed easily enough, it is just a change in attitude that is required, if it is not too late.But humility is hard to accept when you believe you are top dog and are not willing to open your eyes to see the wolf pack circling around you.