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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: Dennis Roth who wrote (87140)7/4/2007 12:55:28 PM
From: ChanceIs  Read Replies (2) of 206281
 
>>>Venezuela to sell gasoline to Iran<<<

Thanks for posting that. Reading the article, one can't discern whether or not Venezuela had been previously selling to Iran. I think that implicitly, Iran has been buying from Venezuela for ages - after all, we have a worldwide market. In one of the attempts to use oil as a political weapon, the Arabs explicitly embargoed the US. It didn't work because there is a world market e.g. the French bought more from the Arabs and then sold it to the US. Of course with less supply on the market, prices nudged up for everyone.

What I think the article implies is that the Venezuelans and Iranians had entered PRIVATE BILATERAL CONTRACTS. (Leave it to the press not to make this point unambiguously clear.) I think this enormously important. Assuming bilateral contracts: 1) you had best believe that that there will be none of Uncle Sam's fine greenbacks involved - more dollar weakness, 2) it reduces liquidity from the entire world market (not sure of the significance but its there), and 3) encourages other nations with a grudge against the US to do the same - I suspect that China does a lot of business under private contract vice NYMEX futures.

I don't think that we can conclude that there will be less oil/gasoline sold to the US from Venezuela. I would not be surprised if there were less. In a competitive world market, the Iranians might not want/afford to purchase as much as they would like. OTOH, Hugo probably gave them a big discount on a larger volume than Iran normally consumes - which would tighten the market, make its other sales clear at a higher prices, and.......pi&^-off "W."
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