Oil trading may be done without dollar
The Independent's Middle East correspondent Robert Fisk talks with Bill Radke about reports that Arab countries are in talks to no longer trade oil in U.S. dollars.
An offshore oil platform (Marcel Mochet/AFP/Getty Images)
More on Oil
Links
- Audio: Where the dollar is
Smith, Moore and Company analyst Juli Niemann talks with Steve Chiotakis about what's going on with the dollar, and how Australia's move to raise its interest rates might impact the greenback. - The Independent: "The demise of the dollar" by Robert Fisk
Robert Fisk
TEXT OF INTERVIEW
Bill Radke The U.S. is already facing economic troubles and mounting debt. Now we're hearing about a challenge to America's global financial leadership. London's Independent newspaper reports this morning Arab countries are talking with China, Russia, Japan and France about no longer trading oil in U.S. dollars. I'm joined by the author of that story, the Independent's Middle East correspondent Robert Fisk. Robert, what's behind this secret push?
Robert Fisk: Well I think it's China's way of pushing its own currency forward along with a basket of other currencies, including gold, the euro, possibly a new currency in the gold. And the idea is to show independence rather than just a complaint against the dollar itself.
Radke: Why would de-linking the oil and the dollar stabilize prices?
Fisk: Because you'd have more currencies to bounce along beside each other. And you couldn't have huge dips and falls on the market for either the consumer or the producer.
Radke: You're right that the U.S. is sure to fight this move. How would this hurt the U.S.?
Fisk: Well I mean the dollar ultimately will go down. It did go down slightly when my story appeared this morning. But then recovered when the Saudis denied that they had any plans for a new currency.
Radke: How much is this happening because of the global meltdown and America's great debt?
Fisk: Well this started before the global meltdown. Although when I spoke to investment brokers and bankers in Hong Kong, they made the point that the meltdown was only proof that they were right to try and move away from the dollar because this -- in their view -- the contagion started in America, spread to Europe and then moved through the rest of the world.
Radke: Can America really fight this move or is this inevitable?
Fisk: I think it's inevitable. So many countries have been talking about it. So many countries have been complaining constantly, and sometimes with great frustration and irritation at the way in which the Americans control the financial system. And I think there's a good deal of frustration, which is mixed up with the political feeling that so many countries are tired of being dominated, now there's only one superpower.
Radke: Robert Fisk is Middle East correspondent for the Independent. Robert, thank you.
Fisk: You're very welcome. Thank you.
Comments
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From clarksville, AR, 10/07/2009
im setting here reading these posts and it bothers me. or country is being distroyed by goverment greed. history showes downfalls of greedy or ruthless goverments if the united does not change its of doing things IT WILL FALE
10/06/2009
It is rumored the real reason for the invasion of Iraq, was that Saddam was going to sell oil in Euros...whether or not his fields rival or dwarf the Saudis, this could indeed have been a problem.
After Nixon took America off the Gold Standard, in order to pay for Vietnam without raising taxes, the Saudi's tying of oil prices to the dollar has been a benefit for both allies. It has retained loyalty, and of course kept the world's largest consumer market's currency strong.
But, with China becoming a large enough consumer market, better saving practices, and a thirst for oil...what strength does America have, besides holding onto the Iraqi oil fields and maybe the Persian Gulf that transfers oil from Iran et al? Libya has the sweeter crude, what Quaddaffi decides to trade in another currency?
From Los Angeles, CA, 10/06/2009
The following answer makes little sense:
“Fisk: Because you'd have more currencies to bounce along beside each other. And you couldn't have huge dips and falls on the market for either the consumer or the producer.”
As anyone versed in price theory, economics, and foreign exchange rates knows, whether a commodity is quoted in Dollars, Euros, Yen, etc., as long as the mediums of exchange are freely tradeable (as all the major are), there is no difference what you quote your price in. The foreign exchange market makes sure that there is no 'arbitrage' to be had. Quoting in more currencies has absolutely no effect on any ‘huge dips and falls’ in the market, that has purely to do with the economics of the oil market.
You should be more careful in making a big story out of something that is economically non-sensical.
Regards,
Pascal Stalder
From HI, 10/06/2009
"
dominated, now there's only one superpower.
"
Materialistic territorial conflict raises its ugly head.
Why America the Beautiful is the emerging standard which far outshines the fool's gold of King Solomon? Because America's Market Freedom Straight From The Pages Of Adam Smith And Professor Hayek is a freedom which stands above the fray over tiny pie slices as it methodically generates a larger pie for its partners, for itself, and for everyone. Yes we need the rule of law. Yes we need law and order. And yes we need self-regulated, passively-regulated markets which trickle down from America towards anyone who wishes to sip from the cup of deflating global prices which bring all good things within the reach of every swinging soul atop this blue planet. Curses on Cartels. Condemn cartel and monopoly as well.
God Bless the 30-year T-Bond
God Bless the Yankee Dollar
God Bless America
Grazia
Ἱερώνυμος
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