ANCAPS order Russia to switch oil trading from dollars to rubles

Russia quietly prepares to switch some oil trading from dollars to rubles

:D

MOSCOW: Russia, the world's second-largest oil-exporting nation after Saudi Arabia, has been quietly preparing to switch trading in Russian Ural Blend oil, the country's primary export, from the dollar to the ruble. But the change, if it comes, is still some time off, industry analysts and officials said.

The Russian effort began modestly this month, with trading in refined products for the domestic market.

Still, the effort to squeeze the dollar out of Russian oil sales marks another project with swagger and ambition by the Kremlin, which has already wielded its energy wealth to assert influence in Eastern Europe and in former Soviet states.

"They are serious," said Yaroslav Lissovolik, the chief economist at Deutsche Bank in Moscow. "This is something they are giving priority to."

Oil trading is now nearly always denominated in dollars, the de facto common currency of the petroleum business. When Kuwait sells oil under a futures contract to India, for example, the price is set in dollars.

Similarly, Russia's large trade with Western Europe and the former Soviet states in crude oil and natural gas is conducted in dollar-denominated contracts. Gazprom, the natural gas monopoly, set the price of natural gas in Ukraine at $176 per 1,000 cubic meters in 2007, for example. There are no proposals yet to switch natural gas pricing away from dollars.

As a result, companies and countries that buy petroleum products are encouraged to hold dollar reserves to pay for their supplies, coincidentally helping the American economy support its trade deficit.

Russia would like to change this practice, at least among its customers, as a means to elevate the importance of the ruble, a new source of national pride after gaining 30 percent against the dollar during the current oil boom.

A move away from the dollar, meanwhile, is more glum news for the United States.

During a speech on economic policy this month, Dmitry Medvedev, a deputy prime minister and the likely successor to President Vladimir Putin in elections on March 2, said Russia should seize opportunities created by the weak dollar.

"Today, the global economy is going through uneasy times," he said. "The role of the key reserve currencies is under review. And we must take advantage of it." He asserted that "the ruble will de facto become one of the regional reserve currencies."

Other oil-exporting countries, too, are chafing at dealing in the weakening dollar.

Iran, one of the largest oil-exporting nations, and no friend of the United States, has since 2005 striven to open a commodity exchange to trade oil in currencies other than the dollar. Iran's ambassador to Russia, discussing the two countries' interest in the idea, said Iran might choose rubles to free his country from "dollar slavery."

http://www.iht.com/articles/2008/02/25/business/place.php

ANCAPS order Russia to switch oil trading from dollars to rubles

ANCAPS order Russia to switch oil trading from dollars to rubles

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