IRAN ASKS JAPAN TO PAY YEN FOR ALL OIL, STARTING IMMEDIATELY
July 13th, 2007Via: Bloomberg:
Iran asked Japanese refiners to switch to the yen to pay for all crude oil purchases, to counter the risk that U.S. dollar transfers may be frozen by increased sanctions.
Iran wants yen-based transactions “for any/all of your forthcoming Iranian crude oil liftings,” according to a letter sent to Japanese refiners that was signed by Ali A. Arshi, general manager of crude oil marketing and exports in Tehran at the National Iranian Oil Co. The request is for all shipments “effective immediately,” according to the letter, dated July 10 and obtained by Bloomberg News.
At stake are payments from Japanese refiners to Iran that rose 12 percent last year to 1.24 trillion yen ($10.1 billion), according to the finance ministry in Tokyo. Iran is Japan’s third- largest oil supplier, behind Saudi Arabia and the United Arab Emirates.
A spokesman for Iran’s oil ministry in Tehran said he could neither confirm nor deny that the letter had been sent. Most Japanese oil refiners have until now used U.S. dollars to pay Iran for oil, said the spokesman, who declined to be identified by name because of government policy.
Yes, however if one looks at the graph of where
the yen has been heading, they’ll note that in the past 2 years it has lost its value by about 22-25% !
I can’t understand why they didn’t go GBP or EUR
since the yen carry trade further devalues the Japanese currency day by day.
Is it true that cuba venezuela iran are the only countries not in debt to the international banking system?
This could be more cunning than it seems. This represents a good deal to the Japanese because they can pay in their own (devaluing) currency, although the pricing model is linked to the yen-usd ratio. What this will do is reduce the demand for the USD by about $10b/year – pocket change compared to flows in the currency markets, but it will have an effect nonetheless. If more oil-importing (and exporting) countries switch to use other currencies, it could trigger a flight away from the USD, as the remaining ones see their stores of dollars diminish in value. If Iran could accomplish this, they will damage the US more than any silly terrorist plot ever could.
What will the US reaction be?
– Do nothing?
– Pressure Japan to reject the offer?
– Attack Iran?
Well they have been hoping for some type of provacative action by Iran to justify an attack on their nuclear reactors, now they have it.
Provocative action indeed! That is no justification.
A supplier is entitled to be paid for his goods or services. The USA has been much more provocative in forcing e-gold to freeze all Iranian e-gold accounts at the beginning of this year simply because it involved accounts owned by Iranian civilians, who were, ironically, those most disposed to be favourable to capitalism and western society.
It is perfectly understandable if the Iranians think it likely that the United States are going to block payments from a third party for oil, when the United States has already done such a despicable thing. It is therefore entirely reasonable for Iran to specify a more trustworthy currency for their transactions.
“Well they have been hoping for some type of provacative action by Iran to justify an attack on their nuclear reactors, now they have it.”
messianicdruid,
That must be one of the most pathetic statements I have heard in a long time.
Because someone facilitates payment for a product in a local currency, it provokes a third party military attack on an energy facility. Methinks that is madness and worthy of any who would countenance it, being sectioned/confined to secured quarters/locked up/removed immediately from office.
I trust that is not ambiguous.
facetious, adj. 1a – given to jesting that is sometimes crude.
It is not justification, unless you have nothing else. again = see above