February 18, 2004

OPEC Has Already Turned to the Euro

Today's GoldMoney Alert from James Turk postulates that OPEC oil sales are already priced in Euro terms.

It's based on correlations over three years...

Three data points is not enough to draw a conclusion, but it's a very interesting postulation. One would need to look at the quarterly or monthly figures to develop any confidence in the claim.

Mind you, it is to be expected. If OPEC started pricing in Euros, they would have maybe not announced it, given the sensitivities. There's nothing like allowing the aggressive dollar traders to discover the fait accompli.

Still, the real question, as James pointed out, is whether they are invoicing in Euros, or accepting payment in Euros without undue conversion penalty. If Oil is in the process of switching from dollar trading to Euro trading, or even a hybrid, this reduces the need for central banks to hold so much dollar reserve, thus releasing more dollars to go back home to the US of A.

Posted by iang at February 18, 2004 07:18 AM | TrackBack