Conspiracy Theory Nonsense: Iranian Oil Bourse

Al Martin
Feb. 08, 2006

The deterioration of relationships between Iran, Western Europe, and United States has other ramifications. The Iranian oil bourse was never a reality anyway. And this finishes it.

For the Iranian oil bourse to work, the Iranians need the support of the Europeans -- not only the political support, but the oil market infrastructure the Europeans have, like LYMEX.

They needed the oil exchanges in Europe and delivery capabilities to make this thing work. And that becomes a lot less likely now.

Of course, this concept of pricing oil in euros was nonsense from Day One. Trichet, the ECB chief, has consistently told the Iranian government not to attempt to price oil in euros.

The euro market is not liquid or deep enough like the U.S. dollar market is.

You can’t go pricing a major commodity like oil in euros and expect to get other partners into the deal like the Iranians sought.

To gain influence in the Middle East, what the Iranians wanted was to have a viable oil trading and delivery mechanism, a viable alternative to the big Western markets--the NYMEX, LYMEX, ZYMEX, etc.

That’s what they wanted to develop, but, being a sanctioned country, they couldn’t use U.S. dollars.

The United States wouldn’t let them. And to try to control as much oil as they would like to control, the market for euros, simply put, is not a deep and liquid enough market.

They would have to come up with some new scheme.

Why do you think the Iranians were so attracted to the Saudi gold-backed dinar proposal? The Iranians were the first to sign onto it because they know themselves the pricing of large amounts of oil in euros isn’t possible. It is simply unfeasible.

Anyway, the Iranian oil bourse idea is conspiracy theory nonsense at its worst. It never had much a chance to get off the ground, and it has even less of a chance now.

(Excerpt from "The Dawning of the New Sino-Russian Global Supremacy As the Sun Sets Over the American Empire" by Al Martin, 2-6-06)

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* AL MARTIN is an independent economic-political analyst with 25 years of experience as a trader on NYMEX, CME, CBOT and CFTC. As a former contributor to the Presidential Council of Economic Advisors, Al Martin is considered to be a source of independent analysis for financially sophisticated and market savvy investors.

After working as a broker on Wall Street, Al Martin was involved in the so-called "Iran Contra" Affair as a fundraiser for the Bush Cabal from the covert side of government aka the US Shadow Government.