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 true geoeconomic earthquake - way beyond a potentially shattering blow to US dollar hegemony.

Last Sunday, the Iranian Oil Bourse - the first-ever oil, gas and petrochemical exchange in the Islamic Republic, and the first within OPEC - was launched 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 bourse.

The bourse's official name is Iranian International Petroleum Exchange (IIPE), widely known in Iran and the Persian Gulf as the Kish bourse. Kish island is 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.

There was frantic speculation all over the world that the bourse would start trading in euros. But according to Nozari, transactions at this early stage will be in Iran's currency, the rial. Anyway the Iranian ambassador to Moscow, Gholam-Reza Ansari, has already advanced that "in the future, we'll be able to use the ruble, Russia's national currency, in our operations".

What Iran plans to do in the long run is quite daring: to directly challenge Anglo-American energy/corporate banking domination of the international oil trade.

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 dollar". Russia's first deputy Prime Minister Dmitry Medvedev said the previous week that "the ruble will de facto become one of the regional reserve currencies."

Slowly but surely

This is just what the Iranians are calling the first phase. Ultimately, the bourse is to directly compete against London's International Petroleum Exchange (IPE) as well as the New York Mercantile Exchange (NYMEX), both owned by US corporations (since 2001, NYMEX is owned by a consortium which includes BP, Goldman Sachs and Morgan Stanley). What Iran plans to do in the long run is quite daring: to directly challenge Anglo-American energy/corporate banking domination of the international oil trade.

There's a lot hanging in the balance to assure the success of the bourse already in this first phase. Other OPEC members, and especially Iran's neighbors, the Persian Gulf petro-monarchies, must be supportive, or at least "catch the drift".

It makes total sense for OPEC member countries to support an alternative to both NYMEX and the IPE, which exercise a de facto, unhealthy monopoly of the oil and gas market, are always very comfortable to exploit volatility for profit, and are always able to wreak havoc against the interests of producer countries. An avalanche of contracts related to Iranian or Saudi oil, for instance, are still indexed to the price of the UK's North Sea Brent oil, whose production is terminally declining.

Everyone in the oil business knows that high oil prices are not really due to OPEC - which supplies 40 per cent of the world's crude - or "al Qaeda threats". The main profiteers are middlemen - "traders" to put it nicely, "speculators" to put it bluntly.

In the summer of 2005, at the Petroleum Ministry in central Tehran, this correspondent interviewed Mohammad Javed Asemipour, then the executive in charge of establishing the Kish bourse. Asemipour stressed the road map, which remains unchanged: the bourse would start dealing with petrochemical products, and then with what everybody really craves - light-sulfur Caspian Sea crude. This was not going to be an Iranian-style exchange, but "an international exchange, fully integrated in the world economy". The ultimate goal is very ambitious: the creation of a new Persian Gulf benchmark oil price.

Today, Minister Nozari admits Iran's share of 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 per cent of the world's crude - or "al Qaeda threats". The main profiteers are middlemen - "traders" to put it nicely, "speculators" to put it bluntly.

The Petroleum Ministry's immediate priorities remain the same: to attract much needed foreign investment in the energy sector in Iran, and to expand its address book of oil buyers. Iran - like so many developing countries - does not want to depend on Western oil trading firms such as Philip Brothers (owned by Citicorp), Cargill or Taurus. Enron - until its debacle - used to be one of the most profitable. Some powerful oil companies - such as Total and Exxon - trade under their own names.

The empire will strike back

At the World Economic Forum in Davos last month, mega-speculator George Soros was adamant, stressing we are at the end of the dollar era and a "systemic failure" may be upon us.

Iran does not trade a single barrel of oil in dollars anymore. Since December 2007 it converted all its oil export payments to other currencies. Iran now sells oil to Japan in yen.

On February 8 in Dubai OPEC Secretary-General Abdullah al-Badri told the London-based Middle East Economic Digest that OPEC may inevitably switch to the euro within a decade.

Iran and Venezuela - supported by Ecuador - are actively campaigning inside OPEC for oil to be priced at least in a basket of currencies.

According to OPEC's current president, Chakib Khelil, OPEC Finance ministers will soon meet to discuss the possibility in depth. According to Iraqi Oil Minister Hussein al-Shahristani, a committee will "submit to OPEC its recommendation on a basket of currencies that OPEC members will deal with."

There's no evidence - yet - that ultra-cautious iron clad US ally Saudi Arabia would incur Washington's wrath by supporting such a move. As for Iran, it is OPEC's second largest exporter. According to minister Nozari, Iran's oil revenue will reach US$63 billion by the end of the current Iranian year, which ends on March 20. Crude oil production is at 4.1 million barrels a day, the highest level since the 1979 Islamic Revolution.

Iran does not trade a single barrel of oil in dollars anymore. Since December 2007 it converted all its oil export payments to other currencies. Iran now sells oil to Japan in yen. That makes sense: Japan is the top importer of Iranian oil, and Iran is Japan's third-largest supplier. Worryingly for the dollar, 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 (UAE) may also switch to their own currency.

As the Kish bourse picks up momentum, more and more oil and gas trading will happen in a basket of currencies - and more and more the US dollar will lose its paramount status... Iranian officials have always maintained Washington has threatened to disrupt the oil bourse - via an online virus, attempting regime change or even the dreaded, unilateral pre-emptive nuclear strike.

As the Kish bourse picks up momentum, more and more oil and gas trading will happen in a basket of currencies - and more and more the US dollar will lose its paramount status. Quite a few Middle East analysts expect the Persian Gulf petro-monarchies to end their dollar 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 Washington has threatened to disrupt the oil bourse - via an online virus, attempting regime change or even the dreaded, unilateral pre-emptive nuclear strike. On the other hand, the possible success of the bourse may be crucial to signal the US's waning power in a world evolving towards multi-polarity. The Saudis and the Persian Gulf petro-monarchies have already decided to reduce their US dollar holdings. It's not far-fetched to imagine Washington, sooner or later, having to pay for its oil and gas imports in euros.

No wonder Venezuelan President Hugo Chavez is so demonized by Washington as he keeps repeating that the empire of the dollar is falling. But even ultra-cautious Prince Saudi al-Faisal, Saudi Arabia's Foreign Minister, has admitted during the latest OPEC summit in Riyadh that the dollar would collapse if OPEC decided to switch to euros or a basket of currencies.

During a crucial closed meeting - with the microphones on, by mistake - Prince Saudi said "My feeling is that the mere mention that OPEC countries are studying the issue of the dollar is itself going to have an impact that endangers the interests of the countries. There will be journalists who will seize on this point and we don't want the dollar to collapse instead of doing something good for OPEC."

The trillion-dollar question is if, and when, most European and Asian oil importers may stampede towards the Iranian oil bourse. OPEC members as well as oil producers from the Caspian may be inevitably seduced by the advantages of selling at Kish - with no dreaded middlemen. If they can buy oil with euros, yen or even yuan, Europeans, Chinese and Japanese won't need US dollars - and the same applies for their central banks.

The trillion-dollar question is if, and when, most European and Asian oil importers may stampede towards the Iranian oil bourse... If they can buy oil with euros, yen or even yuan, Europeans, Chinese and Japanese won't need US dollars - and the same applies for their central banks.

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. It makes total sense. The European Union imports much more oil from OPEC than the US, and 45 per cent of Middle East imports also come from the E.U.

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

Note: The above article was circulated by Information Clearing House.