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Page added on September 14, 2017
Venezuela Just Officially Stopped Accepting Dollars for Oil Payments
Did the doomsday clock on the petrodollar (and implicitly US hegemony) just tick one more minute closer to midnight?
Apparently confirming what President Maduro had warned following the recent US sanctions, The Wall Street Journal reports thatVenezuela has officially stopped accepting US Dollars as payment for its crude oil exports.
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As we previously noted, Venezuelan President Nicolas Maduro said last Thursday that Venezuela will be looking to “free” itself from the U.S. dollar next week. According to Reuters,
“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal.
Maduro hinted further that the South American country would look to using the yuan instead, among other currencies.
“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.
* * *
And today, as The Wall Street Journal reports, in an effort to circumvent U.S. sanctions, Venezuela is telling oil traders that it will no longer receive or send payments in dollars, people familiar with the new policy said.
Oil traders who export Venezuelan crude or import oil products into the country have begun converting their invoices to euros.
The state oil company Petróleos de Venezuela SA, known as PdVSA, has told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner.
The new payment policy hasn’t been publicly announced, but Vice President Tareck El Aissami, who has been blacklisted by the U.S., said Friday, “To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar.“
There is no major market reaction for now – a modest bid to Bitcoin and some weakness in EUR and Gold (seems someone wants this to look like nothing).
However, as Nomura debt analyst Siobhan Morden warns:
“You can say whatever you want for your domestic propaganda and make it look like you’re retaliating against the U.S…. This political posturing will only be to their detriment.”
So what happens if Europe also sanctions Venezuela? Will Rubles or Yuan… or Gold be the only way to buy Venezuela’s oil?
* * *
This decision by the nation with the world’s largest proven oil reserves comes just days after China and Russia unveiled the latest Oil/Yuan/Gold triad at the latest BRICS conference.
It’s when President Putin starts talking that the BRICS reveal their true bombshell. Geopolitically and geo-economically, Putin’s emphasis is on a “fair multipolar world”, and “against protectionism and new barriers in global trade.” The message is straight to the point.
“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”
“To overcome the excessive domination of the limited number of reserve currencies” is the politest way of stating what the BRICS have been discussing for years now; how to bypass the US dollar, as well as the petrodollar.
Beijing is ready to step up the game. Soon China will launch a crude oil futures contract priced in yuan and convertible into gold.
This means that Russia – as well as Iran, the other key node of Eurasia integration – may bypass US sanctions by trading energy in their own currencies, or in yuan.
Inbuilt in the move is a true Chinese win-win; the yuan will be fully convertible into gold on both the Shanghai and Hong Kong exchanges.
The new triad of oil, yuan and gold is actually a win-win-win. No problem at all if energy providers prefer to be paid in physical gold instead of yuan. The key message is the US dollar being bypassed.
RC – via the Russian Central Bank and the People’s Bank of China – have been developing ruble-yuan swaps for quite a while now.
Once that moves beyond the BRICS to aspiring “BRICS Plus” members and then all across the Global South, Washington’s reaction is bound to be nuclear (hopefully, not literally).
Washington’s strategic doctrine rules RC should not be allowed by any means to be preponderant along the Eurasian landmass. Yet what the BRICS have in store geo-economically does not concern only Eurasia – but the whole Global South.
Sections of the War Party in Washington bent on instrumentalizing India against China – or against RC – may be in for a rude awakening. As much as the BRICS may be currently facing varied waves of economic turmoil, the daring long-term road map, way beyond the Xiamen Declaration, is very much in place.
* * *
Having threatened China today with exclusion from SWIFT, we suspect Washington is rapidly running out of any great ally to sustain the petrodollar-driven hegemony (and implicitly its war machine). Cue the calls for a Venezuelan invasion in 3…2..1…!
14 Comments on "Venezuela Just Officially Stopped Accepting Dollars for Oil Payments"
Anonymouse1 on Thu, 14th Sep 2017 7:50 pm
A bold move, considering what the uS did to Saddam Hussein and Muammar Gaddafi for attempting to their oil sales from the uS dollar. But also a necessary one. Perhaps the fact that his country is already under relentless siege by the amerikan empire, he feels the country has nothing to lose. After all, the uS aligned local elites, NGoS, and other 5th columnists inside Venezuela are financed by, yes, uS dollars. Thus, it may even help weaken her internal enemies somewhat by restricting the flows of uS toilet paper.
After all, does it make sense for Venezuela to continue to sell its most important resource in the currency of its tormentors? A currency, which also funds the uS’s own local operatives? I think the answer should be an obvious.
Anonymouse1 on Thu, 14th Sep 2017 7:50 pm
corr. -attempting to de-couple their oil sales..
Shortend on Thu, 14th Sep 2017 9:09 pm
Time for Trumpet to give the CIA a call to undermine their efforts.
Scott Nearing wrote a book titled “Dollar Diplomacy” almost a century ago.
Uncle Sam will not take this laying down,
Economic Hitmen will take of this business.
Dave Thompson on Thu, 14th Sep 2017 9:13 pm
It will be interesting to see how long it takes the US to bomb Venezuela.
Apneaman on Thu, 14th Sep 2017 9:40 pm
No worries, Venezuelan hookers are still accepting greenbacks.
makati1 on Thu, 14th Sep 2017 10:51 pm
I think the US is meeting its masters in the form of the rest of the world turning away, one country at a time. TPTB have no allegiance to any one country. Some seem to forget that fact or never understood it.
China and Russia both have huge financial and diplomatic interests in Venezuela. I don’t see any US “invasion” in the cards. The US is bankrupt, over extended, and has not ‘won’ anything in the last 70 years except the title as the world’s NUMBER ONE DEBTOR.
Venezuela has now joined a growing list of countries dumping the USD. Many more to follow until the USD is just another currency and not worth much. The Great Leveling continues.
Davy on Fri, 15th Sep 2017 5:47 am
This dollar is dying hype BS has been go on now for so long I can’t remember. The dollar is dying along with all major currencies. The Euro is nationalizing its bond markets. Soon the ECB will run out of national bonds to buy. The Chinese have 300% debt to GDP to keep their economy humming. That’s a lot of credit creation. The US gov is 20T in debt with no end in sight. The dollar is dying and it is diminishing. It needs to and that is good in a multipolar world. If done properly we may have less risk. Nothing too big to fail is a good thing. We need less systematically dangerous networks and arrangements.
As far as Venezuela is concerned they won’t get away from the dollar. What they are doing is just window dressing and will actually just make their costs go up in some cases. What they are doing is making a political point because of US sanctions that are putting the hurt on their bonds. Let’s see if their economy survives before we consider this crowing.
I bet China wish it were them instead of the US that they were dumping. The Chinese are up to their eyeballs with Venezuelan bad debt. The total exposure is around 60BIL and very likely much higher. Bad debt is always higher when you consider rehypothecation and underfunded liabilities. If China dumps the dollar then we have a global problem. If the US stops trading with China we have a problem. Those are the two countries that matter. Venezuela is pocket change. The petro dollar is already less significant in the big picture of the 21st century global economy. It is in decline and has been and primarily ever since China became what China is. It is also a product of low oil prices and the deleveraging going on in the global economy with oil economies. They are selling dollar assets to pay off their liabilities not reinvesting dollars in financial assets.
makati1 on Fri, 15th Sep 2017 6:14 am
Davy, the USD has been dying since the end of the gold standard in the 70s. Now, one bt one, more countries are dumping it as a means of trade. Gold will make the hockey stick part of the chart will happen soon. You should invest in lots of toilet paper as the dollar will not even be good for butt wipes. The Great Leveling is moving forward.
Davy on Fri, 15th Sep 2017 6:32 am
too bad that leveling is a coming famine in your part of the world makat
makati1 on Fri, 15th Sep 2017 6:52 am
You hope, but it will not happen in the Ps. It is going to happen in the US sooner. Be patient.
rockman on Fri, 15th Sep 2017 9:33 am
So exactly what currency is Venazuela going to use to pay for its imports from the US? In the past it used the US $’s it had been receiving:
“U.S. goods and services trade with Venezuela totaled an estimated $22.9 billion in 2016. Exports were $11.2 billion; imports were $11.7 billion. ”
Assuming US companies were not accepting inflation crippled Venazuelan currency one has to assume it will take whatever currency it accepts for exports to the US and buys US $’s to pay for its US imports. Venazuela was already having to buy $500 million $’s to cover the imbalance.
Can one say “What’s the f*cking difference?” I know some of you love to play the “death of the US petrodollar” game but let’s try to work a bit of common sense into the discussion. LOL.
fmr-paultard on Fri, 15th Sep 2017 9:42 am
told you guys i’m keeping my supertards. grow your own organic Cambridge Five.
Antius on Fri, 15th Sep 2017 9:46 am
“told you guys i’m keeping my supertards. grow your own organic Cambridge Five.”
Paultard, I struggle to understand what you are on about. Having you been taking meth or something?
Anonymouse1 on Fri, 15th Sep 2017 3:25 pm
Narrativeman, Venezuela has been accepting inflation crippled uS toilet paper for its oil for ages. Now, it is sensibly looking accept payment for oil in other currencies. That is to say, not the currency of their tormentors. For someone who lives in a petro-dictatorship himself, and works in a low level capacity for said petro-state, you appear totally unfamiliar with the mechanisms that permit your corrupt empire to run up its astronomical debts and fund its outsized, corrupt MiC. A military whose main, and only mission truly, we might add, is to ensure the world’s oil remains amerikan, and sold only for amerikan toilet paper. Or failing that, create so much chaos and instability, that everyone else’s access to energy is curtailed to the greatest extent possible.
Of course, it is more than likely you are in fact, well aware of the role the uSD plays in propping up the empire, its cars-only transportation, its eye-watering debts, and its MiC. Which of course, is why you reflexively, and predictably, show up to pour cold water over Venezuela’s actions.