European stocks fell today as nervous investors sold stocks on reports of a build-up of Russian troops near the border with Ukraine. Polish foreign minister Sikorski said Russia has gathered substantial military forces at the border with Ukraine to either put pressure on the neighbouring country or to enter it.
Russian President Vladimir Putin has ordered his government to prepare retaliatory measures against the latest round of Western sanctions. Russian Prime Minister Dmitry Medvedev threatened on yesterday to retaliate for the grounding of a subsidiary of national airline Aeroflot because of EU sanctions, with one newspaper reporting that European flights to Asia over Siberia could be banned.
Premiums for gold bars in India remain depressed and in China premiums remain at $2 to $3 suggesting demand continues in China but at lower levels than those seen last year.
Russia Delivers Blow To Petrodollar In Historic $20 Billion Iran Oil Deal
Russia signed a historic $20 billion oil deal with Iran to bypass both western sanctions and the dollar based western monetary system yesterday.
Currency wars are set to escalate as the petro dollar’s decline continues.
Russian Energy Minister Alexander Novak and his Iranian counterpart Bijan Zanganeh signed a five-year memorandum of understanding in Moscow, which included cooperation in the oil sector.
“Based on Iran’s proposal, we will participate in arranging shipments of crude oil, including to the Russian market,” Novak was quoted as saying.
The five year accord will see Russia help Iran “organise oil sales” as well as “cooperate in the oil-gas industry, construction of power plants, grids, supply of machinery, consumer goods and agriculture products”, according to a statement by the Energy Ministry in Moscow.
The deal could see Russia buying 500,000 barrels of Iranian oil a day, the Moscow-based Kommersant newspaper has previously reported. Under the proposed deal Russia would buy up to 500,000 barrels a day or a third of Iranian oil exports in exchange for Russian equipment and goods.
The Russian government withdrew the statement regarding the deal last night, but said it would issue a new statement today.
In January, Russia said that they were negotiating an oil-for-goods swap worth $1.5 billion a month that would enable Iran to lift oil exports substantially to Russia, undermining Western sanctions.
Yesterday, the Russian President told regional leaders that “the political tools of economic pressure are unacceptable and run counter to all norms and rules.” He said in response to western sanctions he had given orders to boost domestic manufacturers at the expense of non-Russian ones.
The White House has previously said that reports of talks between Russia and Iran were a matter of “serious concern”.
“If the reports are true, such a deal would raise serious concerns as it would be inconsistent with the terms of the agreement with Iran,” Caitlin Hayden, spokeswoman for the White House National Security Council, said in January.
U.S. and European Union sanctions against Russia threaten to hasten a move away from the petro dollar that’s been slowly occurring since the global financial crisis.
See important guide to Currency Wars here Currency Wars: Bye, Bye Petrodollar – Buy, Buy Gold