Russia Finance Minister: We May Abandon Dollar In Oil Trade As It Is Becoming “Too Risky”

Breaking the tie between oil and the U.S. Dollar means the collapse of the U.S. Dollar as the world reserve country. Collapsing of the U.S. Dollar as world reserve currency means the collapse of America. Ghadaffi attempted it, as well as Saddam Hussein and look how that worked out for them. Iran, Syria, China, Russia all want to. Economic warfare always precedes a hot war, in case you were wondering what’s around the corner.

 

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One month ago, the bond market and political pundits did a double take when according to the latest Treasury International Capital report, Russia had liquidated virtually all of its US Treasury holdings, selling off the bulk of its US government bonds in just two months, March and April.

And with the US threatening to impose a new set of “crushing” sanctions on Russia, including in retaliation for the alleged Novichok nerve gas attack in the UK, Russia not only intends to continue liquidating its US holdings, but to significantly reduce its reliance on the US Dollar. Continue reading

The Clock Is Ticking On The U.S. Dollar As World’s Reserve Currency

The View From Hubbert’s Peak

In 1971, the American President put an end to a 2,500 year trend; the Wall Street Journal called it “Nixon’s Worst Weekend.” Considering the old boy had some really bad ones, this must have been something special. In August of that year (on Friday the 13th) it was decided that the U.S. would no longer pay out gold for its paper dollars. OPEC Ministers took note, and in September they met, deciding it would be necessary to collect more paper dollars, if possible, since gold was no longer on offer and oil was the only asset they had to sell.

The Wizard of Oz

The ultimate irony for this generation of investors is that, despite the occasional obligatory chant about ‘free markets’ and the wonders of capitalism, most of the day is spent obsessing about what the world’s most important central planner will do next. By Supreme Central Planner, I mean, the Fed. Continue reading

US May Run Out Of Oil Storage Space As Soon As June

On Sunday, we noted that the economics of the floating storage play could spell further declines for crude prices. With a global stock increase that’s some 3 times larger than that which occurred during the last period of oversupply, expect cheap, on-land storage to prove inadequate necessitating the use of VLCCs. According to Soc Gen, determining how far the front end of the curve would have to fall in order for traders to arbitrage the difference between buying and storing physical oil and selling paper forward is a good indicator for where prices may find a floor:

Continue reading

Petro-dictators are in even more trouble than we thought a few days ago

On Oct. 9, we said the outlook for the world’s petrocrats looked bad. It just got worse: Saudi Arabia has been hoping that producers of American shale oil will be forced to begin cutting back given the plunge of oil prices, but the International Energy Agency (IEA) said today that prices can fall a good deal more.

What does that mean for geo-politics? Admittedly long-shot nuclear talks with Iran that resumed today in Vienna may stand a better chance of resulting in a deal. And Russian leader Vladimir Putin may be more conciliatory with Ukraine in gas-price discussions that begin next week. Continue reading