Pepe Escobar | Feb 21 | Asia Times Online

It was a discreet, almost hush-hush affair, but after almost three years of stalling and endless delays it finally happened. Now more than ever, it may also signal a geoeconomic earthquake, a potentially shattering blow to US dollar hegemony.

The Iranian oil bourse - the first oil, gas and petrochemical exchange in the Islamic Republic, and the first within the Organization of Petroleum Exporting Countries (OPEC) - was launched on Sunday by Iran’s Oil Minister Gholam-Hossein Nozari, flanked by Minister of Economy and Financial Affairs Davoud Danesh Ja’fari, the man who will head the exchange.

Officially called the Iranian International Petroleum Exchange (IIPE), it is widely known in Iran and the Persian Gulf as the Kish bourse, named after Kish island, a free zone (declared by the shah) in an ideal laissez faire setting: lots of condos and duty-free malls, no Khomeini mega-portraits and hordes of young honeymooners shopping for made-in-Europe home appliances.

Transactions at this early stage will be in Iran’s currency, the rial, according to Nozari, ending worldwide speculation that the bourse would start trading in euros. The Iranian ambassador to Russia, Gholam-Reza Ansari, has said that "in the future, we'll be able to use the ruble, Russia’s national currency, in our operations". He added that "Russia and Iran, two major producers of the world’s energy, should encourage oil and gas transactions in various non-dollar currencies, releasing the world from being a slave of the dollar."

Today, Minister Nozari concedes that Iran’s share of the global oil trade is still very low. Enter the bourse, which is the solution to eliminate the middlemen. Everyone in the oil business knows that high oil prices are not really due to OPEC - which supplies 40% of the world’s crude - or "al-Qaeda threats". The main profiteers are middlemen - "traders" to put it nicely, "speculators" to put it bluntly.

To be sure, there’s no evidence yet that ultra-cautious US ally Saudi Arabia would incur Washington’s wrath by supporting such a move. But as for Iran, OPEC's second-largest exporter, it no longer trades a single barrel of oil in dollars. That is no small amount of non-dollars. The country's oil revenue will reach US$63 billion by the end of the current Iranian year on March 20, according to Nozari.

Iran converted all its oil export payments to other currencies in December 2007. It now sells oil to Japan in yen - the Far East country, the world's second biggest economy, is the top importer of Iranian oil and Iran is Japan’s third-largest supplier. Worryingly for the dollar, other oil producers are preparing to follow Iran's lead. Qatari Prime Minister Sheikh Hamad bin Jassim al-Thani has already announced that the tiny oil-rich emirate would abandon the dollar for the Qatari riyal before summer. There’s a strong possibility the United Arab Emirates may also switch to its own currency.

As the Kish bourse picks up momentum, increasing amounts of oil and gas trading will happen in a basket of currencies - and increasingly the US dollar will lose its paramount status. Some Middle East analysts expect the Persian Gulf petro-monarchies to end their dollar currency peg sooner rather than later - some say as early as next summer, as their black gold will increasingly not be traded in dollars. Iranian economist Hamid Varzi stresses that the "psychological effect" of Iran’s move away from the US dollar is "encouraging others to follow suit".

Iranian officials have always maintained that Washington has threatened to disrupt the country's oil exchange - via an online virus, attempted regime change or even through a unilateral pre-emptive nuclear strike. Certainly some analysts argue that the strength of the US dollar, like the strength of the British pound before that, is a reflection of, and is maintained by, those countries' military strength (see Why Iran's oil bourse can't break the buck, Asia Times Online, March 10, 2006).

On the other hand, the possible success of the exchange may be crucial to signal the US’s waning power in a world evolving towards multipolarity. The Saudis and the Persian Gulf petro-monarchies have already decided to reduce their US dollar holdings. Washington, sooner or later, may have to pay for its oil and gas imports in euros

It would take only a few major oil exporters to switch from the dollar to the euro - or the yen - to fatally bomb the petrodollar mothership. Venezuela, Norway and Russia are all ready to say goodbye to the petrodollar. France officially supports a stronger role for the euro in international oil trade.

It may be a long way away, but ultimately the emergence of a new oil marker in euros in Kish will lead the way to the petroeuro global oil trade. The European Union imports much more oil from OPEC than the US, and 45% of Middle East imports also come from the EU.

The symbolism of the Iranian oil bourse is stark; it shows that the flight from the US dollar is irreversible - and so, sooner rather than later, is diminution of Washington's capacity to launch wars on credit. But at this early stage in the game, only one thing is certain: the empire will strike back.