This is how Russia will replace the U.S. “petrodollar”
Zero Hedge reports the U.S. “petrodollar” is at risk… and it seems to have started with U.S. sanctions against Russia.
The U.S. dollar is world’s “reserve” currency – meaning other countries trade and hold their reserves in U.S. dollars. Because of this, it’s also the standard currency for global energy trading, aka the “petrodollar.”
If Japan wants to buy a barrel of oil from Saudi Arabia… they transact in U.S. dollars. This creates a consistent demand for U.S. currency… and means the U.S. can accumulate massive debts without defaulting.
Countries have been trying to replace the U.S. “petrodollar”… but the latest U.S. “sanctions war” with Russia is causing them to try even harder.
Russian Economic Minister Alexei Ulyukaev recently told Russian energy companies “they must be braver in signing contracts in rubles and the currencies of partner-countries.”
The CEO of Russian bank VTB said the largest Russian energy companies don’t mind switching exports to rubles… they only need a mechanism to do that. This mechanism is being established right now.
The head of Russia’s largest oil company, Igor Sechin, is working on a commodities exchange. He said, “It was advisable to create an international exchange for the participating countries, where transactions could be registered with the use of regional currencies.” This means he’s calling for an international exchange where Russian oil and natural gas is priced in rubles… not U.S. dollars. This would hit the U.S. “petrodollar” hard… and possibly position Russia to start a “petroruble.”
Russia is also working with another country with U.S. sanctions… Iran. Russia and Iran are close to signing a goods-for-oil contract. Russia would receive 500,000 barrels of oil per day in exchange for goods.
If the tide turns against the U.S. petrodollar, America would be one big step closer to the loss of its reserve currency status – and what our colleague Porter Stansberry calls the “End of America.”
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