Iran Ends Oil Transactions In U.S. Dollars

OPEC's Second-Largest Producer Now Pegs Petroleum To Euros And Yen

(AP)  Iran, OPEC's second-largest producer, has completely stopped conducting oil transactions in U.S. dollars, a top Oil Ministry official said Wednesday, a concerted attempt to reduce reliance on Washington at a time of tension over Tehran's nuclear program and suspected involvement in Iraq.

Iran has dramatically reduced dependence on the dollar over the past year in the face of increasing U.S. pressure on its financial system and the fall in the value of the American currency.

Oil is priced in U.S. dollars on the world market, and the currency's depreciation has concerned producers because it has contributed to rising crude prices and eroded the value of their dollar reserves.

"The dollar has totally been removed from Iran's oil transactions," Oil Ministry official Hojjatollah Ghanimifard told state-run television Wednesday. "We have agreed with all of our crude oil customers to do our transactions in non-dollar currencies."

Iranian President Mahmoud Ahmadinejad called the depreciating dollar a "worthless piece of paper" at a rare summit last year in Saudi Arabia attended by state leaders from the Organization of Petroleum Exporting Countries.

Iran put pressure on other OPEC countries at the meeting to price oil in a basket of currencies, but it has not been able to generate support from fellow members — many of whom, including Saudi Arabia, are staunch U.S. allies.

Iran has a tense relationship with the U.S., which has accused Tehran of using its nuclear program as a cover for weapons development and providing support to Shiite militants in Iraq that are killing American troops. Iran has denied the allegations.

Iranian oil officials have said previously that they were shifting oil sales out of the dollar into other currencies, but Ghanimifard indicated Wednesday that all of Iran's oil transactions were now conducted in either euros or yen.

"In Europe, Iran's oil is sold in euros, but both euros and yen are paid for Iranian crude in Asia," said Ghanimifard.

Iran's central bank has also been reducing its foreign reserves denominated in U.S. dollars, motivated by the falling value of the greenback and U.S. attempts to make it difficult for Iran to conduct dollar transactions.

U.S. banks are prohibited from conducting business directly with Iran, and many European banks have curbed their dealings with the country over the past year under pressure from Washington.

However, the U.S. has been wary of targeting Iran's oil industry directly, apparently worried that such a move could drive up crude prices that are already at record levels.

Iranian analysts say Tehran can withstand U.S. pressure as long as it can continue its oil and gas sales, which constitute most of the country's US$80 billion in exports.

[forthepeopl1]

AMERICANS NEEDS TO STRIKE........NO ONE WORKING FOR A WEEK OR SO WOULD TELL THE GOVERNMENT ONE THING, THEY CANT DO ANYTHING WITHOUT US AMERICANS WORKING FOR THEM AS SLAVES, SO IF EVERYONE WOULD NOT WORK FOR A COUPLE OF WEEKS, DONT BUY ANYTHING, DO NOTHING FOR A WEEK SEE HOW FAST THE GOVERNMENT STARTS LISTEN TO US.........COME ON AMERICANS WHAT WAITING FOR BUSH/CHENEY TO DECARE A STATE OF EMERGENCY BEFOR YOU WAKE-UP

[msdnvp]

the world needs to be run on Euros, Not Dollars, if we keep on supporting the dollar transactions we are support American wars in all parts of the world. that simply can not be good for anybody. trade in euros and support third world countries into developing their own trades.

[dodaz-2009]

Hmmmmmm...

[rjh03]

This comment goes directly to "CANYOUTELLME":

You are what is wrong with America. It''s

chauvinistic filth like what you have posted, that will lead to the Yooonited States downfall (won''t happen soon dammit!). I guess since Canada does business with Iran, (can you guess i''m Canadian?) it means that i''m an evil person, and thus a terrorist.

Sorry I have to go fix my igloo...it''s melting.

[mudrose-2009]

Iranian production peaked in 1974, but it has been unable to produce at a consistent rate since the 1979 Iranian Revolution due to a combination of political unrest, war with Iraq, limited investment, US sanctions, and a high rate of natural decline. Iran''s mature oil fields are in need of enhanced oil recovery (EOR) techniques such as gas injection to maintain production, which is declining at an annual rate of approximately 8 percent onshore and 10 percent offshore. With its current technology it is only able to recover about 25 percent of the oil in place, 10 percent less than the world average. Iran consumed 1.6 Mbbl/d (250,000 m3/d) of its own oil as of 2006. Domestic consumption is increasing due to a growing population and large government subsidies on gasoline, which reduces the amount of oil available for export and contributes to a large government budget deficit. Due to a lack of refinery capacity, Iran is the second biggest gasoline importer in the world after the United States.[30] High oil prices in recent years have enabled Iran to amass nearly $60 billion in foreign exchange reserves, but have not helped solve economic problems such as high unemployment and inflation.

So maybe it would be better to change their currency for the present since the devaluation of the dollar is costing them.

[mudrose-2009]

Iran is slowly unraveling no matter *what* the price of a barrel of crude oil actually IS, they are slowly closing the gap between production and consumption on both sides of the equation. Trying to get old, inefficient equipment on the old maritime oil platforms up and running will in no way meet this need and may even draw off further resources from maintaining the current infrastructure.

Exactly how close is the Iranian petroleum system from collapse?

It is a metastable system with a heavy change bias to it. Internal collapse between 2012-19 is certain with current domestic market needs increasing and actual oil field production declining. And like many systems in decay the half-life is very important, because it is usually the inflection point for catastrophe: it is the point where a ship sliding to its side will suddenly capsize. It is the spell of bad weather for a year or two that can change lush cropland into dustbowls.

A point of no return.

[mudrose-2009]

The explosions and missiles and weapons that you see causing harm in Lebanon and Iraq that are supplied by Iran are doing far more damage to Iran''s petroleum infrastructure than they can ever do to Lebanon or Iraq. They may be going off elsewhere, but the damage being done is at home where it is not only not being fixed, but being actively disregarded.

If Iran announces that they will *not* be expecting to let any liquefied natural gas contracts of a substantial amount or will be stopping existing contracts, then a first and mighty indicator will be seen.

If Iran buys gasoline or any other finished petroleum goods en mass and announces refinery ''problems'' then that, too will be an indicator.
And in the next five years if Iran announces that it will be ''shutting off its oil to the world'', that means that it is no longer producing enough to sell and that it can barely cover internal needs.

[mudrose-2009]

18 months Iran has not met its OPEC export quotas. That is one of the most basic of futures to be met: the agreement amongst Middle Eastern States to ensure world crude oil supply. Iran is failing that.

So when you hear that ''Iran may threaten to cut off its exports'' it may not be due to ANY outside activity at all. They may have simply run out of oil to export.

And that will happen far before those two lines meet as when a system that is complex like oil refining begins to decay, it indicates that the most complex part of a very complex interlocking system is already going to hell. When that part of the system cannot be maintained properly, even at a LOSS, which is the case now, there is then a leading indicator that the less sophisticated parts of the system, like pipelines, pumping stations, well-head pumps, separation facilities and so on, are also being run inefficiently. The expertise needed to run those is in the same league, but more distributed as that needed to run the refineries. Those are now seen as not running up to capacity, either.

[underdogus]

I also want to point out that the last Middle East Nation to try converting to Euros instead of dollars as a base for trade was Iraq under Saddam... and we all know what happened next....

[underdogus]

the OPEC Nations and China have already either quietly begun or announced they are going to diversify into other currencies...

[mudrose-2009]

CANADA 2,326 ...

Much of that Canadian oil is actually Iranian oil after bein imported into Canada...........
Posted by Quetzal0666

Does Mexico also get it''s oil from Iran? I hear that Iran has to refine it''s oil which mean it has to go out of the country because the crude is too crude. So should we give a ***** if Iran wants to deal in other than U.S. greenbacks?

[missingamerica]

lollll...I think this is embarrassing. Try as you want to paint this move as evidence of "evil intent" by Iran, it comes down to the fact that our currency can devalue significantly just in between the time an oil contract is signed and when the oil is loaded onto a tanker...

Man...a few more years of Republicans "running government like a Business", and they''ll be hanging "Foreclosed" signs across all of our customs booths at the nation''s ports and points of entry...

[quetzal0666]

Just a fact,
you dont have to like it,
thats the irony of this whole thing.
there are other countries and companies who buy from Iran, yet it ends up tight here.

[liberalme]

So I guess Bush sending aircraft to the Persian Gulf has scared the crapola out of Iran huh?

[dinkydog1]

Iraq nationalizes thier oil fields ending US companies monoploy. Soon after we are at war. Iran stops taking US currency and the state Dept is beating the war drums again. Are there any dummies left out there who still believe this war is not about oil?

[canyoutellme-2009]

CANADA 2,326 ...

Much of that Canadian oil is actually Iranian oil after bein imported into Canada...........


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Posted by Quetzal0666 at 10:29 AM : May 01, 2008
+ report abuse
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So, are you saying that Canada does business with Iran? and since the US has declared Iran to be part of the axis of evil and therefore terrorists who are trying to nuke us.... are you saying we should bomb Canada for supporting terrorism?

[quetzal0666]

CANADA 2,326 ...

Much of that Canadian oil is actually Iranian oil after bein imported into Canada...........

[prinzowhales]

Little wonder the Iranians have been targeted by the Zionazis in America and Israel. Iran has discovered that it does them little good to hold on to pay good oil in exchange for sh*tty little pieces of paper that are constantly declining in value...

...one day Americans are going to awaken to this fact as well...but only after all the world wakes up to it and much of the animal kingdom.

[underdogus]

Latin american nations were also considering a common currency including Mexico...they will favor stronger currencies over weaker ones, and will re-adjust accordingly.....

[forthepeopl1]

so why do we say opec opec opec, they have nothing to do with the most of the oil we get..mexico is a close 3 rd??????????????