15 May 2006

The first Dilbert Blog commenter other than me who seems to have picked up on the full economic impact of the Dollar-Euro change in selling oil, Congrats!

on March 20, 2006, that advantage may have disappeared forever. On that date, Iran opened the Iranian Oil Bourse...where anybody, anywhere can trade as much oil as they want...as long as they price it not in dollars, but in euros.
Keep in mind, when Saddam Hussein revalued his entire oil supply in euros in the year 2000, he made a fortune on this move, as the dollar plunged against the euro. We were shocked and awed. So on June 10, 2003, we set things "right."
We marched into Baghdad and switched all his oil accounts back to dollars...even though it meant losing billions on the transaction. Because it was the only way we could steer clear of what could have been the biggest dollar disaster in U.S. history.
Now Iran - an even bigger oil power than Iraq - has taken petrodollar dumping to a whole new level. If Saddam's move to the euro was a threat, this new bourse is like dropping an atom bomb.
Europe will benefit. Russia, China, and Japan will benefit. Iran will benefit. And to fundamentalist Muslims in more than 206 countries around the world, it tastes like victory. But it's a nightmare for the U.S. Federal Reserve and the U.S. dollar.
Does this mean military action against Iran?
Maybe, and maybe not. Either way, foreign investors get spooked.
Posted by: Bobby May 14, 2006 at 06:06 AM

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