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Oil, US Dollar and hegemony

In addition to generating intense speculative activity in Oil and other commodities , the Ukraine crisis has set the ball rolling on several fronts internationally. The crisis has put in sharp focus Europe critical dependence on Russia for its Oil and Gas. This crisis also created an urgency with respect to Iran negotiations with the US for lifting of sanctions so that additional Iran oil may calm markets. The sweeping sanctions on Russia has made other countries not in western block weary of US unilateral actions and intolerance for any quarter harbouring even slightly different notions. This must be creating ripples in circles responsible for strategic planning and future policy. This crisis will change landscape not only of Europe but also of world economic affairs.

Every use of a force or even threat of use of that force changes the way in which that force may again be used in future. As if every ‘force’ or ‘action’ has a set number of ‘lives’. This Ukraine conflict will allow countries to make preparations and adopt strategies for their own national interests or their international aspirations in light of US actions or inactions.

US hegemony on world economic affairs and centrality of dollar for Oil trade has come into sharp focus because of US sanctions on Russia. Interestingly Saudi has declared that Saudi Arabia is in talks to receive Chinese Yuan instead of US dollar (source: Wall Street Journal report). Such talks have a certain history but have gained prominence again as dollar hegemony on Oil trade is being questioned in light of economic sanctions.

Also see this piece  (by zerohedge.com) on Oil and dollar based trade.


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