Cafe of Broken Dreams by John scientific terrorist in action

Rumors about Replacing the Dollar in the Crude Oil Market

Today there appeared some speculations on the Independent that Arab states started a deal with Russia, France and China about replacing the USD in the crude oil market. However the rumors has been after a while completely denied by all supposed participants.

This is not a new thing, a year ago I pointed out that behind the peak oil price was actually the value of the dollar and as a proof I have shown the oil price nominated in gold which is much more stable.

This oil-dollar peg has been point of many conspiracy theories that the USA controls all those countries and forces them to use the dollar. Which is, of course, as the most of conspiracy theories a non sense.

Anyone can trade a crude oil in any currency he want to, using the FX market (spot conversion is a matter of seconds). And anyone can calculate the crude oil price in any currency, using basic math of the elementary school level.

So why all of them has used the dollar? Because it was really profitable for them. And because it does not seems that good anymore, there are some talks about changing the dollar leading position.

Consider this, The Saudi Monetary Agency gained more than 1 trillion Saudi ryials  (cca 260 billions USD) just in 6 years due to the USD peg. All those money are saved somewhere all around the world, owned by someone in the government. (SAMA annual report, page 46). The same goes for China which gained much much more.

So talks about forcing someone are nonsense,  non-US governments will use the USD as long as it is profitable. When it stop being profitable they will simply switch to something different, which is China doing now, so far it has not been much successful.

UPDATE: Just realized that behind this report is 9/11 “Truther”  Robert Fisk, that explains all thought