OPEC fleeing the dollar

According to Robert Fisk at the Independent, who should know, with his degree of connectedness in the Middle East, Gulf Arab states, working with Russia, China (no surprise on those two) Japan and France, are going to stop pricing oil in dollars. Gold, the euro, and a new inter-Gulf currency will be used as a “basket” currency instead.

Reuters has some in-depth analysis.

But apart from the strong political links between Gulf nations and the United States, the lack of convertibility for many Gulf currencies and China's yuan tops the list of practical hurdles for making such a shift.

"First, they will need to select a basket of currencies and issues surrounding that are: which are the currencies to be included in the basket and what ratios to use," said Victor Shum, an energy analyst at Purvin & Gertz Consultancy in Singapore.

"It's already a big hurdle just to move oil from one currency to another, let alone a basket of currencies. If there was already a significant proportion of global oil trade being priced in non-U.S. dollar now, than perhaps there would be more pressure to price crude in another currency. But we're still far from that."

So, let’s see how this plays out, and how much China is behind it, for that matter.