Venezuela Dumps Federal Reserve Dollar for Oil Payments

Monday, September 17, 2007

Venezuela will not accept Federal Reserve Dollars for payments of oil deliveries anymore.
Venezuelan President Hugo Chavez instructed Petroleos de Venezuela SA, the state oil company, to convert its investment accounts from dollars to euros and Asian currencies to reduce risk,
Bloomberg reported.
Chavez, speaking in his weekly address on national television, said the U.S. has bought goods from around the world, paying with paper that is "a bubble."
The world's oil trading system has primarily used dollars for decades, helping to make the dollar into a global currency. Iran in July requested yen rather than dollars for all shipments to Japan, boosting that currency.
Chavez has said in the past that he wants to divert Venezuelan oil sales from the USA to other clients, especially China.
Venezuela and China will work together on a $10 billion project to build six refineries and a shipping company to make Venezuela one of China's most important suppliers. Still, the U.S. continues to import 1.36 million barrels a day of crude and refined products from Venezuela, more than half its estimated 2.4 million barrels a day of output.
Crude oil jumped above the $80 mark after this announcement.

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