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ashurbanipal · 11-21-07, 09:38 AM

This move is definitely symbolic, but the symbolism has much more power than many may realize looking only at the numbers.

Old Reliable is right to point out that trade in oil is a drop in the bucket when compared with the currency trade, or (by extension) any solid estimate of just how many dollars change hands every day. Iranian oil is a fairly small segment of the total oil trade. So it's not like the dollar loses much circulation.

But given oil's importance to human civilization, this symbolic hit may lead to other nations dumping their dollar reserves. And if that happens, even a 5% or 10% bump in dollars for sale may depress the price significantly.

It turns out that Iranian oil production is collapsing, not quite as badly as Mexico's production. Iran will be pumping less than half the oil it does now in just ten years, maybe less. So we may be able to afford to let this one go. But if Venezuela jumps on board (as it appears they might), and if any other big producer decides to follow, I think it'll have a snowball effect on the dollar. I suspect we'd follow that up with military action.

11-21-07, 09:38 AM	#6 (permalink)
ashurbanipal Professor Join Date: Dec 2005 Last Online: 12-30-08 05:46 PM Posts: 1,496 Thanks: 284 Thanked 161 Times in 122 Posts Lean: Private Gender:	Re: Iran To Stop Selling Oil for Dollars This move is definitely symbolic, but the symbolism has much more power than many may realize looking only at the numbers. Old Reliable is right to point out that trade in oil is a drop in the bucket when compared with the currency trade, or (by extension) any solid estimate of just how many dollars change hands every day. Iranian oil is a fairly small segment of the total oil trade. So it's not like the dollar loses much circulation. But given oil's importance to human civilization, this symbolic hit may lead to other nations dumping their dollar reserves. And if that happens, even a 5% or 10% bump in dollars for sale may depress the price significantly. It turns out that Iranian oil production is collapsing, not quite as badly as Mexico's production. Iran will be pumping less than half the oil it does now in just ten years, maybe less. So we may be able to afford to let this one go. But if Venezuela jumps on board (as it appears they might), and if any other big producer decides to follow, I think it'll have a snowball effect on the dollar. I suspect we'd follow that up with military action.