The Biggest Threat To Dollar Dominance

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Russian oil exporters are pressuring Western commodity traders to pay for Russian crude in euros and not dollars as Washington prepares more sanctions for the 2014 annexation of Crimea by Moscow, Reuters reported last week, citing as many as seven industry sources.

While it may have come as a surprise to the traders, who, Reuters said, were not too happy about it, the Russian companies’ move was to be expected as the Trump administration pursues a foreign policy where sanctions feature prominently. This approach, however, could undermine the dominance of the U.S. dollar as the global oil trade currency. Continue reading

US sanctions: SWIFT network suspends Iran banks

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The SWIFT banking network, the backbone for international monetary transfers, said Monday it has suspended several Iranian banks from its service, after the United States reimposed nuclear sanctions on Tehran.

“In keeping with our mission of supporting the resilience and integrity of the global financial system as a global and neutral service provider, SWIFT is suspending certain Iranian banks’ access to the messaging system,” it said. Continue reading

Europe’s Gas Game Just Took A Wild Twist

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Despite the almost unprecedented divisive nature of Donald J. Trump’s presidency, he is chalking up some impressive foreign policy victories, including finally bringing Beijing to task over its decades long unfair trade practices, stealing of intellectual property rights, and rampant mercantilism that has given its state-run companies unfair trade advantages and as a result seen Western funds transform China to an emerging world power alongside the U.S.

Now, it looks as if Trump’s recent tirade against America’s European allies over its geopolitically troubling reliance on Russian gas supply may also be bearing fruit. On Tuesday, The Wall Street Journal reported that earlier this month German Chancellor Angela Merkel offered government support to efforts to open up Germany to U.S. gas, in what the report called “a key concession to President Trump as he tries to loosen Russia’s grip on Europe’s largest energy market.” Continue reading

US Is Negotiating With SWIFT To Disconnect Iran From Network

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Treasury Secretary Steven Mnuchin said that unlike Obama’s 2013 Iran blockade, it would be harder for countries to get waivers on Iran oil sanctions as the US is already working on disconnecting Iran from the SWIFT network and dismissed concerns that oil prices could rise, saying the market had already factored in the output losses.

Speaking in an interview with Reuters in Jerusalem on Sunday at the start of a Middle East trip, Mnuchin said countries would have to reduce their purchases of Iranian oil by more than the roughly 20% level they did from 2013 to 2015 to get waivers. “I would expect that if we do give waivers it will be significantly larger reductions,” said the US Treasury Secretary. Continue reading

Russia And China Prepare To Ditch Dollar In Bilateral Trade

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In a time when many nations have gone public with their intention to ditch the dollar in part or in whole, in bilateral trade with non-US counterparts, either to prevent the US from having “veto power” of commerce courtesy of SWIFT or simply in response to Trump’s “America First” doctrine, attention has long focused on Russia and China – the two natural adversaries to the US – to see if and when they would accelerate plans for de-dollarization. Continue reading

Saudi Arabia Calls The End Of Russia’s Oil Prowess

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Saudi Arabia has not only called the end of Russia’s prominence as a global oil behemoth, but anticipates that Russia’s oil exports “will have declined heavily if not disappeared” within the next 19 years, Mohammed bin Salman said in a recent interview with Bloomberg. Continue reading

Venezuela Ditches US Dollar, Will Use Euros For International Trade

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Venezuela has just taken the next step in its quest to “free” itself from the tyranny of US dollar hegemony. One year after the country said it would stop accepting US dollars as payment for its (ever shrinking) oil exports (saying the country’s state-run oil company would accept payment in yuan instead), Venezuelan Vice President for Economy Tareck El Aissami said Tuesday that Venezuela will officially purge the dollar from its exchange market in favor of euros. Continue reading

Saudis Vow to Retaliate if ‘Punished’ for Khashoggi Disappearance

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The kingdom has effectively threatened to cut off oil supplies if it is sanctioned.

As many countries around the world have rallied to say they will punish Saudi Arabia if it is found to have been involved in the disappearance and possible death of dissident journalist Jamal Khashoggi, the kingdom vowed it would retaliate against any such action. Continue reading

The Anti-Silk Road

BERLIN/BEIJING (Own report) – At this week’s Asia-Europe Meeting in Brussels, the EU will introduce a new “connectivity strategy” to counter China’s “New Silk Road.” As outlined by the EU’s head of foreign policy in September, the strategy is aimed at improving transportation infrastructure as well as digital and energy networks linking Asia and Europe. Beijing is also active in these domains in connection with its Silk Road initiative. Recently, Germany’s Ministry of Foreign Affairs launched an initial thrust in this project. At the time, Minister of State Niels Annen (SPD) declared in Uzbekistan that social standards and human rights are “priorities” for Brussels. “This is what makes our offer different from China’s Belt and Road initiative.” For years, Germany had supported – even with military assistance – the Uzbek regime that was applying torture. Washington has also launched a new infrastructure initiative in Asia, to which US Secretary of State Mike Pompeo declared that the USA is committed to “honest accords” and would “never seek dominance over the Indo-Pacific.” Continue reading

A New Era for the China-Russia-U.S. Triangle

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Nearly a half-century ago, President Richard Nixon’s secretary of state, Henry Kissinger, established a successful U.S. strategy for dealing with America’s two most dangerous rivals. He sought closer ties to both the Soviet Union, with its more than 7,000 nuclear weapons, and Communist China, with the world’s largest population.

Kissinger’s approach was sometimes called “triangulation.” But distilled down to its essence, the phrase meant ensuring that China and Russia were not friendlier to each other than each was to the United States

Given that the Soviet Union was much stronger than China at the time, Kissinger especially courted Beijing. Continue reading

U.S. Crude Oil Exports Could Jump To Almost 4 Million Bpd By 2020

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U.S. crude oil exports could increase to 3.9 million bpd by 2020, mostly driven by rising production in the Permian, the Houston Chronicle reported on Tuesday, citing a new report by S&P Global Platts.

U.S. crude oil exports are expected to reach 2.2 million bpd next year, according to the estimates. Continue reading

A New Era Of Geopolitical Risk In Global Oil Markets

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Amid never ending talk and speculation over how many more barrels of Iranian oil will be removed from global markets once sanctions slated to hit Iran’s oil production on November 6 take effect, some are claiming that geopolitical factors have driven the market just as much as supply fundamentals.

At Russia Energy Week in Moscow last week, both Saudi and Russian energy ministers said they see rising geopolitical risk as driving the recent oil price increase at a time when there is sufficient supply in the market. Of course, the notion of sufficient supply will be tested soon, as will both Saudi Arabia’s and OPEC’s spare production capacity will be called on to maintain this supply. Continue reading

Saudi Arabia And Russia Make Secret Oil Deal

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Are Saudi Arabia and Russia helping Trump out by agreeing to increase oil production?

A new report from Reuters says that Russia and Saudi Arabia “struck a private deal” in September to increase production in order to suppress oil prices. Intriguingly, the pair apparently phoned the U.S. before the Algiers meeting in late September to relay the details of their plan.

The report is an indication that Saudi Arabia was trying to respond to pressure from President Trump to lower oil prices. If the White House was informed about the secret private deal, it didn’t seem to resolve Trump’s concerns. Continue reading

Trump To Saudi King: “You Wouldn’t Last Two Weeks Without Us”

 

One week after President Trump accused Saudi Arabia of deliberately conspiring to drive up oil prices during his speech before the United Nations General Assembly, the president stepped up his rhetoric against America’s most important strategic ally in the Middle East during a rally in Southaven Mississippi Tuesday night, implying that the US could withdraw the military protection it provides to the kingdom and warning that the Saudi regime that it wouldn’t survive for “two weeks” without US support. Continue reading

US Hints At Naval Blockade Of Russian Energy Exports Which Moscow Warns Would Be “An Act Of War”

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Interior Secretary Ryan Zinke speaking at an industry event on Friday. Image source: State Impact Pennsylvania

 

In a interview about fracking and the implications of making the United States less dependent on foreign sources of energy, Interior Secretary Ryan Zinke told the Washington Examiner that the US Navy has the ability to blockade Russia from controlling energy supplies in the Middle East.

“The United States has that ability, with our Navy, to make sure the sea lanes are open, and, if necessary, to blockade… to make sure that their energy does not go to market,” Zinke said on Friday at a Consumer Energy Alliance event in Pittsburg.  Continue reading