Barack Obama's foreign policy woes have showed up once again as on Feb. 6, recently unsanctioned Iran announced that all current and future oil sales will be done in the Euro currency, and not the petrodollar standard. This move comes just a few weeks after Iran was allowed to begin the selling of their oil on the open market following years of having to transact sales through the black market because of U.S. imposed sanctions.
Coincidentally as well, this new financial announcement comes days after Russia became the largest seller of oil to China, overtaking long-standing U.S. partner Saudi Arabia who was the catalyst for the 40 year petrodollar agreement which guaranteed all sales of oil were to be done using the global reserve currency.
Analysts for now are unsure if this new agreement was the trigger behind the dollar's massive drop last week, where the currency fell from just under 100 on the index to close at below 97, but any disruption or even elimination of the petrodollar in international oil sales would have detrimental effects to America's hegemony over the global reserve currency.
Iran has turned away from the US dollar in oil trade and is denominating in euros all new and outstanding oil contracts with companies, including French oil and gas giant Total, Spanish refiner Cepsa and Litasco, the trading arm of Russia’s Lukoil, a source at National Iranian Oil Co told Reuters.
"In our invoices we mention a clause that buyers of our oil will have to pay in euros, considering the exchange rate versus the dollar around the time of delivery," the source said.
Iran has also told its trading partners who owe it billions of dollars that it wants to be paid in euros rather than US dollars. - Sputnik News
Since 2013 when Russia and China began a new partnership in oil trade, nations around the world began to see the day when the petrodollar would no longer be the sole currency of choice for use in international energy sales. And since Russia has already signed agreements with China to sell oil in either Roubles or Yuan, the pressure has been on OPEC to choose a side, with Iran now being the first to cut ties with the dollar.
As the U.S. continues to lose ground in use of the dollar in all global trade, the end of the petrodollar would be a death blow to the currency as the nations who hold over $14 trillion in U.S. reserves would no longer need them for trade, causing a severe panic to the currency and to Treasuries. And with each passing day, more and more nations are divesting themselves of their dollars and setting the stage for a showdown of epic proportions that may lead to a new reserve currency altogether.