By my reading, we're at the eve of destruction. Though Jerome a Paris' comments on this diary are noteworthy. It's hard to know which way China is going to go. Regardless, should Iran do this, the value of the dollar will cave on volatility concerns alone, with speculators wondering whether China will take an economic hit to destabilize petrodollar hegemony, or whether China views itself as profiting from the fact that the current petrodollar system returns its central banks a profit on financing U.S. debt.
After all--if China and other nations switch to a bourse with Petroeuros, the artificial international demand for the U.S. dollar will cease. If that happens, the value of foreign-held T-Bonds decreases dramatically. China will take a huge hit, but even more significantly, the shockwave from the collapse will send the U.S. economy into a massive recession.
The only hope for stability is the formation of a compromise system so the transition from petrodollar monopoly to mixed-currency oil trading is gradual and the economic hit can be gradually absorbed via the falling oil prices that will result from a portion of market-share being evaluated in stronger Euros. Or, the administration can do what it just might be planning: invade Iran to stop the bourse, lose thousands of American lives, send the economy into a complete tailspin, have massive civil unrest, and impose martial law to ensure the stability and continuing security. Regardless, a paradigm shift is coming.