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Russia Breaking Wall St Oil Price Monopoly

Will Russia and China moves to price OIL in their own currency work?

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DaveFagan

DaveFagan

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Russia Breaking Wall St Oil Price Monopoly
    Russia Breaking Wall St Oil Price Monopoly :  Information Clearing House - ICH
"By F. William Engdahl
January 13, 2016 "Information Clearing House" - "NEO" - Russia has just taken significant steps that will break the present Wall Street oil price monopoly, at least for a huge part of the world oil market. The move is part of a longer-term strategy of decoupling Russia’s economy and especially its very significant export of oil, from the US dollar, today the Achilles Heel of the Russian economy.....The setting of an oil benchmark price is at the heart of the method used by major Wall Street banks to control world oil prices. Oil is the world’s largest commodity in dollar terms. Today, the price of Russian crude oil is referenced to what is called the Brent price. The problem is that the Brent field, along with other major North Sea oil fields is in major decline, meaning that Wall Street can use a vanishing benchmark to leverage control over vastly larger oil volumes. The other problem is that the Brent contract is controlled essentially by Wall Street and the derivatives manipulations of banks like Goldman Sachs, Morgan Stanley, JP MorganChase and Citibank.

....It was the advent of “paper oil,” oil traded in futures, contracts independent of delivery of physical crude, easier for the large banks to manipulate based on rumors and derivative market skullduggery, as a handful of Wall Street banks dominated oil futures trades and knew just who held what positions, a convenient insider role that is rarely mentioned inn polite company. It was the beginning of transforming oil trading into a casino where Goldman Sachs, Morgan Stanley, JP MorganChase and a few other giant Wall Street banks ran the crap tables.
....In the aftermath of the 1973 rise in the price of OPEC oil by some 400% in a matter of months following the October, 1973 Yom Kippur war, the US Treasury sent a high-level emissary to Riyadh, Saudi Arabia. In 1975 US Treasury Assistant Secretary, Jack F. Bennett, was sent to Saudi Arabia to secure an agreement with the monarchy that Saudi and all OPEC oil will only be traded in US dollars, not Japanese Yen or German Marks or any other. Bennett then went to take a high job at Exxon. The Saudis got major military guarantees and equipment in return and from that point, despite major efforts of oil importing countries, oil to this day is sold on world markets in dollars and the price is set by Wall Street via control of the derivatives or futures exchanges such as Intercontinental Exchange or ICE in London, the NYMEX commodity exchange in New York, or the Dubai Mercantile Exchange which sets the benchmark for Arab crude prices. All are owned by a tight-knit group of Wall Street banks–Goldman Sachs, JP MorganChase, Citigroup and others. At the time Secretary of State Henry Kissinger reportedly stated, “If you control the oil, you control entire nations.” Oil has been at the heart of the Dollar System since 1945.
.... The Russian move to price in rubles its large oil exports to world markets, especially Western Europe, and increasingly to China and Asia via the ESPO pipeline and other routes, on the new Russian oil benchmark in the St. Petersburg International Mercantile Exchange is by no means the only move to lessen dependence of countries on the dollar for oil. Sometime early next year China, the world’s second-largest oil importer, plans to launch its own oil benchmark contract. Like the Russian, China’s benchmark will be denominated not in dollars but in Chinese Yuan. It will be traded on the Shanghai International Energy Exchange. Step-by-step, Russia, China and other emerging economies are taking measures to lessen their dependency on the US dollar, to “de-dollarize.” Oil is the world’s largest traded commodity and it is almost entirely priced in dollars. Were that to end, the ability of the US military industrial complex to wage wars without end would be in deep trouble."

Would these "too big to fail" banks manipulate prices?
Are the manipulators patriotic to Nation or currency?
Will Russia and China moves to price OIL in their own currency work?
 
This kind of topic pops up every few years. Iranian Oil Bourse! Petro Dollar! Russian crude priced in the Rouble! It never has any meaningful impact. But without fail fanatical advocates return to the topic more hopeful than before, predicting the demise of the sinister US Petrodollar and our nefarious banks. Lol.
 
If the entire World does not devolve into a huge depression in the near future and OIL collapses into the $10-20 range, Russia and China will likely succeed. Otherwise, it's a tossup because of warring turmoil regarding markets. Interesting times, indeed.
 
Sherman123 said:
This kind of topic pops up every few years. Iranian Oil Bourse! Petro Dollar! Russian crude priced in the Rouble! It never has any meaningful impact. But without fail fanatical advocates return to the topic more hopeful than before, predicting the demise of the sinister US Petrodollar and our nefarious banks. Lol.
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It's nice that you recognize the "nefarious" nature of USA Banks. The USA Petrodollar is indeed "sinister," as you say.
 
Yet another ongoing fantasy. The people who write such editorials such as that referred to in the OP have no idea what they're talking about re the Ruble and Yuan, and how corrupt the respective banking systems behind them are. Hint: they're far more corrupt and incompetent than the U.S. and Euro central banks, and both of those countries are almost entirely dependent on tech transfers from other countries for their industries, particularly oil and energy industries. The entire capital of the much vaunted BRIC 'bank' might, on a good day, be equivalent to the annual U.S. pet industry GDP, for instance. The only countries who would want their deposits denominated in Yuan or Rubles are countries with even worse currencies.
 
Oberon said:
Yet another ongoing fantasy. The people who write such editorials such as that referred to in the OP have no idea what they're talking about re the Ruble and Yuan, and how corrupt the respective banking systems behind them are. Hint: they're far more corrupt and incompetent than the U.S. and Euro central banks, and both of those countries are almost entirely dependent on tech transfers from other countries for their industries, particularly oil and energy industries. The entire capital of the much vaunted BRIC 'bank' might, on a good day, be equivalent to the annual U.S. pet industry GDP, for instance. The only countries who would want their deposits denominated in Yuan or Rubles are countries with even worse currencies.
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I read this and my thought was BRIC also. I think that Russia and other countries would 'like' to break off currency wise. but since the world bank , the IMF, FOREX, and most world markets all operate based on us dollars, I think it would cost them more money to try and break off than they could afford. so yea I agree its a fantasy.
 
Baloney article.

The US dollar is like the English language. It is universally used and isn't tied to its place of origin. It's not by chance that the dollar strengthens in times of economic uncertainty.
 
DaveFagan said:
Would these "too big to fail" banks manipulate prices?
Are the manipulators patriotic to Nation or currency?
Will Russia and China moves to price OIL in their own currency work?
Click to expand...

Too many false assumptions, almost conspiracy level thinking, in that article.

Right off, Russia and China both for years and on many occasions have tried to convince key members of OPEC to move away from the US Dollar. More important than the US Dollar becoming "paper oil," the real reason for it is the reserve status of the US Dollar. The article at least mentions, or hints, at the US Dollar being readily available as well as used by so many other nations as the world's reserve currency. Last time I checked just over 60% of all currency reserves around the world are held in the US dollar. The Euro is a distant second with less than 25%. Russia and China both are no where near that point. That immediately tells you that Russia and China are wanting that switch to obtain better status against the basket of international currencies and have their internal currency manipulations have the same impact as US currency manipulations. But the problem for both Russia and China is the currency itself is too unstable and attached to such high degrees of distortions that the US dollar is safe by comparison. So safe that there is no real comparison. And you can forget about other nation's currencies. Japan's is too volatile on a very stressed economic model, and the Euro is in the middle of a QE project that by effect has pushed the value of the US Dollar even higher against that basket of international currencies.

Dealing with Oil trade specifically, the "too big to fail" banks are not the biggest winners in that market. It happens to be whom you would think it would be when really following the money made from the market, producers of oil and those that speculate on the market with futures contracts (both nations like Saudi Arabia as an example, and certain private enterprise organizations.) Wall Street does not own that monopoly, to be honest OPEC and other various corporate producers have a oligarchical impact on oil price.

It is easy to argue that much of our foreign policy for the greater Middle East does have to do with their oil interests, but that does not mean that it is US Dollar protectionism. What the article makes the biggest mistake on is the assumption that decoupling the US Dollar from oil will diminish our roles in wars over oil. Assuming for a moment that the US Dollar lost that role as the dominant reserve currency, then all the onus would be on us to protect as much of oil trade as we could to fulfill demand. It might even put us in the UK position of being in bed with very strange company just to ensure product. Even worse than our current affiliations and support of the tyrants and lunatics over in Saudi Arabia.

And speaking of the oil price war, Saudi Arabia has overplayed their hand to the point that their production levels just to ensure market share have driven the price of oil so far down that they cannot spend all domestically that they once did. Made only worse by questions on world economic growth and the US Dollar gaining in valuation against other currencies not fairing near as well. Just about every oil producing nation is experiencing headaches, namely Russia and Venezuela. Making it even less likely that the Saudis can consider moving away from the US Dollar given how far the ruble has fallen. Compared to just the US Dollar, the ruble is worth about 1/3rd of what it was 4 years ago.
 
DaveFagan said:
It's nice that you recognize the "nefarious" nature of USA Banks. The USA Petrodollar is indeed "sinister," as you say.
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Go Russia, right? I guess you're their biggest cheerleader now.
 
OrphanSlug said:
Too many false assumptions, almost conspiracy level thinking, in that article.

Right off, Russia and China .....

Dealing with Oil trade specifically, the "too big to fail" banks are not the biggest winners in that market. It happens to be whom you would think it would be when really following the money made from the market, producers of oil and those that speculate on the market with futures contracts (both nations like Saudi Arabia as an example, and certain private enterprise organizations.) Wall Street does not own that monopoly, to be honest OPEC and other various corporate producers have a oligarchical impact on oil price.

It is easy to argue that much of our foreign policy for the greater Middle East does have to do with their oil interests, but that does not mean that it is US Dollar protectionism. What the article makes the biggest mistake on is the assumption that decoupling the US Dollar from oil will diminish our roles in wars over oil. Assuming for a moment that the US Dollar lost that role as the dominant reserve currency, then all the onus would be on us to protect as much of oil trade as we could to fulfill demand. It might even put us in the UK position of being in bed with very strange company just to ensure product. Even worse than our current affiliations and support of the tyrants and lunatics over in Saudi Arabia.

And speaking of the oil price war, Saudi Arabia has overplayed their hand to the point that their production levels just to ensure market share have driven the price of oil so far down that they cannot spend all domestically that they once did. Made only worse by questions on world economic growth and the US Dollar gaining in valuation against other currencies not fairing near as well. Just about every oil producing nation is experiencing headaches, namely Russia and Venezuela. Making it even less likely that the Saudis can consider moving away from the US Dollar given how far the ruble has fallen. Compared to just the US Dollar, the ruble is worth about 1/3rd of what it was 4 years ago.
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That's a wonderfully insightful response, thank you. All that you state is absolutely truthful and the numbers are precise. I'm not sure who the most powerful ETF traders are, but JPMorgan Chase and Goldman Sachs come instantly to mind. In normal markets, I would guess they would be happy to exercise enough control to induce $1-2 swings in a pre-conceived direction. They can own the tankers awaiting offshore and exert that control on the day they unload. I realize Saudi Arabia's current oligarchical control of World prices and also am aware that the US economic war (Economic arm of Full Spectrum Dominance) against Russia and Venezuela probably welcomes and perhaps encouraged this policy. The Frack Oil Business in the USA becomes a temporary casualty, but it is pretty much Conservative Republican territory during a Democratic Administration and an election year. The ruble has lost half its' value in just the last year. At the same time the USDollar has increased about 28%. Since OIL is Russia's major trade lifeline, I can clearly understand the drop of the Ruble's value. I haven't a clue what could cause the 28% increase in the USDollar value. I suspect manipulations by the USA by the Plunge Protection Team and the Exchange Stabilization Fund. Both require only a Presidential signature for implementation and are secretive. That 28% kills USA exports and damages USA manufacturing, both small and large. The USDollar, fiat currency, money because we say it is, backed by confidence. Worldwide demand was created for USDollars when the Saudis agreed to the USA Petrodollar format for all OIL sales. At that point, all foreign buyers of OIL needed USA dollars to continue their purchases of OIL and US Dollars (checks written against the US Treasury) are never cashed/repatriated. When the USA defaulted on the Bretton Woods Agreement and the rest of the World did not violently react, the die was cast and we have FIAT Reserve Currency. "Deficits don't matter," unless everything crashes and the loan must be repaid. The USA has not paid its deficit since 1835 and it is not likely to start now. Do National Parks count as collaterol. What collaterol will be collected on?
 
DaveFagan said:
I haven't a clue what could cause the 28% increase in the USDollar value.
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Look at it this way, it may clear up a few more things.

One, What is happening today with the price of oil, we have all seen it play out just like this before.

Between October 1985 and March 1986 the price of oil dropped some 70% ('ish,) for more or less the same reason even though motivations were somewhat different. In the early 1980s Saudi Arabia decided to play a little control game with OPEC, aligning themselves as a "swing producer" for OPEC to ensure price control (thus profit control and market share.) When other OPEC nations cheated that role, Saudi Arabia in 1985 turned up production to its actual technical limits in response. Pushing so much oil on the market, at a time of questionable US and European nation demand, that price plummeted in very short order. People were on the futures exchanges around the globe with puts on contracts as low as $7.50 per bbl, and amazingly enough with contractual buys on those positions assuming hold status for the oversupply. Here in the US fracking already existed, but was not near as quick to react to discovery of shale oil tracks. Some suggest that oil bust contributed to, if not accelerated, the demise of the USSR. Companies here like Exxon and Shell were leaving massive levels of exploration equipment on properties all over the place as the costs suggested abandonment was cheaper than moving them somewhere else. Today, the Saudis simply reacted to losing market share. US companies were seeing massive profits from higher priced oil, enough that traditional oil tar, oil sands projects, and shale oil all were profitable. Saudi Arabia alone saw their market share from 2007 to 2014 drop from 33% to somewhere in the low 20% range, so they reacted just like they did in 1985 and ramped up production to damn near technical limits. We have concerns on global demand over 2016 and outward, thus prices are in free-fall. Same thing is happening again, shale oil projects are being walked away from domestically. All you are really seeing is the Saudis playing with the market, on repeat. The shale oil exploration and extraction business will go back into hibernation until prices go up enough to warrant picking up those contracts again.

Two, "JPMorgan Chase and Goldman Sachs" are not winning anything here.

ETFs that hedge against energy markets are not seeing enough gains here to matter, and there is too much concern on the markets for when this oil volatility will end. But what you do not see happening is investment dollars rushing into other areas just yet. Equities are still under pressure, debt markets are not that much improved, and metals are still depressed.

Three, the tie of the US Dollar to Oil.

No matter what, the US Dollar has too much strength as a reserve currency to consider competition currency to it to trade oil in. It is not that the Saudis are married to the US Dollar because of oil, they are married to exchange it opens to them where holding the US dollar opens up over 65% of the world markets to them immediately. And do not discount that the only reason the US Dollar is up is the basket of currency it competes with is all under pressure (and/or too much manipulation question.)

Lastly, politics here at home.

Republicans need the US oil industry to do well and the military industrial complex to do well, but they also need Saudi Arabia to be there as an ally and as a condition of US interventionist foreign policy for the greater Middle East region. It is a marriage of convenience, and both sides get something out of the deal. Which gives you even more evidence that the Saudis are not going to be all that quick to entertain other currencies to trade oil in. The Saudis, at some point, will be convinced to quit this Oil oversupply... probably in exchange for other things they tend to like. Namely our military equipment. Until then expect the US oil industry to muddle along using the recently adopted means to export raw oil without having to import replacement oil (thanks to the budget agreement last last year negotiated by... Republicans.)
 
Pretty it up with all the flowery words, and currency theory's that you like, but what it all comes down to is, who is actually willing to pump it out of the earth and deliver it to the market at price that they can sustain.

Crude prices are not the only reason for for high pump prices.

A lack of refineries has proven to be a gold mine for the government, speculators, and oil companies.

Katrina should have been a wake up call for consumers.
 
Sherman123 said:
This kind of topic pops up every few years. Iranian Oil Bourse! Petro Dollar! Russian crude priced in the Rouble! It never has any meaningful impact. But without fail fanatical advocates return to the topic more hopeful than before, predicting the demise of the sinister US Petrodollar and our nefarious banks. Lol.
Click to expand...

Neferious? The U.S. Petrodollar is a great boon to the U.S. economy, although as it's pointed out, too much of it is used to finance the M.I.C. instead of our own infrastructure improvements.
 
reinoe said:
Neferious? The U.S. Petrodollar is a great boon to the U.S. economy, although as it's pointed out, too much of it is used to finance the M.I.C. instead of our own infrastructure improvements.
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It has given us Multi-Trillion dollar wars on the credit card. When do we repay the card?
 
DaveFagan said:
It has given us Multi-Trillion dollar wars on the credit card. When do we repay the card?
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When it no longer gets the POTUS a second term or enables over a 90% re-election of congress critters to keep adding to the national tab. Until then we will continue to borrow our way to prosperity. ;)
 
If you mean: Are sanctions an impossibility after the currency change? Then, no.
 
OrphanSlug said:
Too many false assumptions, almost conspiracy level thinking, in that article.
Click to expand...
Indeed. Information Clearing House (ICH) is a well known anti-American/conspiricist website. Similar to the Centre for Research on Globalization.
 
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