"The U.S. will bomb Iran because Iran attempts to start an oil bourse."
That is meme flying around the blogsphere and in some comments here. It is wrong.
The meme is constructed around this thesis:
"The value of the U.S. Dollar would go down, if oil would be traded in exchange for other currencies."
Thereby, this construct says, it would seriously harm the U.S. and the U.S. preempts this with war.
Two distinct different transactions and economic calculation are mashed in this argument.
First: I want to sell this stuff. How do I get compensated?
Sometimes a compensation might be a product or commodity. During the cold war the USSR delivered gas to Germany and got compensated with thousands of miles of special seamless pipes and other industrial goods. I did learn to weld at a shipyard that sold ferries to Indonesia for thousands of tons of agriculture goods.
Usually the compensation medium is some form of money and the preference is on the side to have it in a currency that is universally accepted. The U.S. Dollar is a usual candidate, as is the Euro. Gold in the form of gold related currencies could be a good candidate too. But you would also take rice, sheep or tons of ore, if that is the better deal at hand.
Everybody thrives to optimizes the deal. The currency is not relevant in this, the value is.
You make a deal where you exchange one value for another value but when the deal is done, and you are not in immediate need of seamless pipes or rice or dollars, there is the real question.
Second: How do I store this value.
If you did get a somehow interchangeable value for your goods, dollar or euro or gold or rice or ore or sheep, you are not a bit restricted in your decision here. The penalty for changing a billion $ to € or vice versa is quite small. For ore it may be bigger, but you would have reflected that in the deal above.
All this dwarfs if you look at yield differences and risks of various investments. Do I buy a 4% bond in currency X or a 2% bond in currency Y. Will X fall and Y rise? Do I buy shares in A or in B? How are the dividends?
This decisions is not based on the currency you did the deal with. It is based on expectations of inflation rates or company prospects.
A Iran oil exchange or trading place is not a danger for the U.S. $. Someone who trades oil does not care about the currency related to the exchange as long as that value is, somehow, interchangeable with others. The currency question only comes up in investments where the yield of a euro bond may be less of a the yield of dollar bond while the dollar bond may have a higher risk of inflationary devaluation.
So the Iran oil-exchange meme is wrong when it is founded on the trading currency – dollar dump argument.
The meme could be right if it were is based on the notation that both of todays major oil trading places, the IPE in London and the NYMEX, are owned by powerful U.S. banks.
Owning an exchange includes making the rules and judging on them. That allows for some creative schemes to boost ones profits. But there is not yet much prove that the lobbying of these folks would induce a military conflict of the foreseen grade.
But the power to control the flow of oil, to be able to deny oil to some at will and to give it at favorable (with a profit) rates to other is a much bigger financial and national interest incentive than some trading scheme profits.
Iran is THE middle east producer that is currently NOT under U.S. control.
With Iran under U.S. control, any U.S. President would have great leverage to deny oil at a reasonable market price to any other state. Be that Japan, some E.U. country that doesn´t follow the rules or China, the ultimate enemy the military-industrial complex needs to have.
So what is the best way to make Japan, the E.U. and China your enemy?