This post generated some interesting dicussion.
Aaron also posted an interesting quote from the article:
“There has been a growing realization on the part of major oil producers such as Iran and Saudi Arabia that oil is not priced in dollars but rather dollars are priced in oil. The reality underpinning this epiphany is the fact that oil has “value”, or “money’s worth” – in exchange for commodities, goods and services – whereas the financial object we are accustomed to think of as the “dollar” is merely a “claim over value”, or IOU issued by the US Federal Reserve Bank.
If we look at the current structure of the global energy market, we are conditioned to think that the “big bad wolf” is a “cartel” of OPEC members. However, the fact of the matter is that while there has indeed been a cartel extracting extraordinary profits from energy markets in recent years, this has consisted of intermediary investment banks and energy traders, who control the global market platform on which oil is traded and benchmark prices are set. In other words, the derivative tail has been wagging the oil market dog.”