Iranian Oil Bourse
Description:
The Iraqi government switched all oil trades from the US Dollar to the Euro in the fall of 2000. This was followed by the Iranian government in 2003, which stopped trading in the currency of the enemy (the US dollar) and switched to the Euro, Yen, Yuan, and other currencies. Furthermore it announced it would introduce a new global oil trading standard based on the Euro somewhere in 2005 or 2006: the Iranian Oil Bourse.
The switch of Iraq to the Euro already had a significant impact in the worldwide economy. National banks ditched their Dollar reserves in favour of the Euro, thus giving it a stronger position on the currency market. If Iran indeed starts a new global oil trading standard (last reports say it will go in trade on March 20, 2006) this will have major impact on the US economy and trade balance. This was being recognized by the Americans, who forced Iraq to switch back to Dollars the second Saddam Hussein was defeated.
It is expected that several countries (such as Venezuela, and probably Russia) will adopt the new standard in favour of the British IPE (owned by American corporation) or American NYME. This will initiate a run on Euros while the Dollar will devaluate drastically. The American trade deficit and economic position can weaken considerably, while the quotation of the Euro will rise, thus having a positive impact on the European (and Dutch) economy.
Enablers:
- Anti-Americanism caused by the War on Terror and the war in Iraq
- The lack of alternatives for oil trading (e.g. no European or Asian standard to trade - only the UAE Dubai crude, which is an oil marker and not a bourse – while the NYME and IPE are both American owned)
- Current American political environment
- The Increase of the United States Budget Deficit
- The rise of Asian nations
- Socialist government in Venezuela
- Current developments in the Euro/Dollar ratio in favour of the Euro
- Nuclear crisis in Iran
- Current right-wing government in Iran
- Rebellion in the Niger-delta
- Declining Dollar
- Internal consumption in US
- Oil price
- China's accumulated capital as the driving force of the economic growth
- Continuous assaults on Iraqi oil facilities
Inhibitors:
- Threat of possible American or Israeli attack/intervention in Iran
- Restoring of order in Iraq and Afghanistan
- Revolution or a coupe d’état in Iran
- Creation of another (Asian) oil standard (e.g. UAE, Dubai, Saudi Arabia, Singapore, India, Hong Kong can come up with alternatives in Dollars)
- No adoption of the new standard of other countries (possibly under pressure of the USA)
- Iran decides not to introduce the Iranian Oil Bourse
- The negative effects of the Iranian Oil Bourse on the American economy carry over to the European economy to the same extent
Paradigms:
The successful introduction and worldwide introduction of the Iranian Oil Bourse can have enormous impact on the current global economy and balance of power. It can herald the ending of the hegemony of the status of the USA as only super power, thus creating a more balanced situation consisting of several trade blocks: the EU, China, Japan, the USA, India, and several other countries. However, this change in the American economy will initially be felt in a negative way by all global economies and communities.
Experts:
N/A
Timing:
- 2000: Iraqi government starts to trade oil in Euros
- 2001: George W. Bush elected
- 2003: American led invasion in Iraq
- 2003: Iraqi oil trades switched back to US Dollars
- 2003: Iran stops trading in US Dollars and announces the introduction of the Iranian Oil Bourse somewhere in 2005 or 2006
- 2004: George W. Bush re-elected
- 2005: Right-wing Mahmoud Ahmadinejad elected as 6th president of Iran
- 2005: American trade deficit increases dramatically
- 2006: Possible introduction Iranian Oil Bourse?