By Neenah Payne
The Birth of the Petrodollar 1974-1975 explains:
The 1973 oil crisis further fixed the value of the dollar as a result of this oil shock, bringing Saudi Arabia and the OPEC countries to make a secret agreement with Washington….. This agreement provided that in exchange for Washington’s political and military protection, the OPEC countries would be required to sell oil only in dollars. The petrodollar was thus born, being a replacement for the gold-linked standard that existed prior to Nixon. Once this system was supported by OPEC members, the global demand for US petrodollars hit an all-time high.
The video below explains that Saudi Arabia’s agreement to sell oil exclusively in dollars ended on June 9, 2024 – ending the backing for the petrodollar as the world’s reserve currency. The Crown Prince of Saudi Arabia has decided to open up its lucrative oil trade to other countries and currencies. Saudi Arabia has now joined a China-led digital currency project.
The video explains that the BRICS (Brazil, Russia, India, China, and South Africa) nations have announced a new BRICS payment system as the World Bank challenged the status of the US dollar in international transactions. Saudi Arabia is considering a full BRICS membership this year.
What Is The Petrodollar System? — Biggest Weapon Of US Imperialism 2/3/24
Saudi Arabia Just Shocked the Dollar! Future with BRICS and China 6/13/24
Saudi Arabia just changed the entire future of the US dollar when it decided to end it's 50-year agreement with the US and the Petrodollar. Saudi Arabia is now looking to BRICS and China for their future in this new multipolar world. What happens next for the US dollar and BRICS? Let's break it down!
The video refers to Tucker Carlson’s 6/7/24 interview of Rep. Thomas Massie who warned about the end of the petrodollar.
Rep. Thomas Massie: Israel Lobbyists, the Cowards in Congress, and Living off the Grid (video)
Saudi Arabia Just Ditched The U.S. Dollar
Andrei Jikh explains the significant shift in global economics with the expiration of the long-standing Petro dollar agreement between Saudi Arabia and the US on June 9, 2024. This system, in place for 75 years, marked the US dollar as the world's reserve currency, granting economic stability and access to rising asset prices. The arrangement between the US and Saudi Arabia helped preserve the US dollar's dominance over global trade.
However, this past Sunday, the Saudi Arabian prince announced that he would not renew the contract, signaling a major change in the global financial landscape. This agreement, initiated after World War II, allowed the US to control the world's energy, and its impact on the standard of living for Americans is substantial. The Petro dollar system replaced gold as the standard of value and enabled the US to maintain dominance over international trade. The reasons behind Saudi Arabia's decision not to renew the contract are part of a larger story, and its implications for us and future generations are yet to be fully understood.
Andrei discusses the trend of countries moving away from using the US dollar in international trade and oil transactions, with Saudi Arabia being the latest reported addition. The speaker argues that this could signal the end of America's global financial dominance and raises the question of what the US is famous for exporting that the world is buying. The answer, according to the speaker, is US dollars. The speaker explains that the US economy benefits greatly from being able to export dollars and issuing debt in the form of treasury bonds, which creates a stable economy, lower interest rates, and financial market liquidity.
He discusses the potential consequences of Saudi Arabia's decision to no longer use the US dollar for oil transactions. He explains that higher interest rates resulting from this decision could lead to more expensive mortgages, rents, auto loans, student loans, and credit cards. It could also put a strain on the banking system, national deficit, and federal budget, potentially leading to higher taxes. Additionally, the value of the dollar itself could be affected, making traveling and buying goods from other countries more expensive…..
Saudi Arabia ends petrodollar agreement: What it means for the USD, Bitcoin, and gold
The established financial world order of the past 50 years is now transitioning to a new and unknown paradigm as the petrodollar agreement between the U.S. and Saudi Arabia was allowed to expire this past Sunday. The term ‘petrodollar’ described the U.S. dollar’s (USD) role as the currency used for crude oil transactions on the world market. It traces back to the early 1970s when the United States and Saudi Arabia struck a deal shortly after the U.S. went off the gold standard – and the agreement has had far-reaching consequences for the global economy.
The petrodollar agreement came about following the 1973 oil crisis. It stipulated that Saudi Arabia would price its oil exports exclusively in U.S. dollars and invest its surplus oil revenues in U.S. Treasury bonds. In exchange, the U.S. provided military support and protection to the kingdom. This helped the USD cement its position as the world’s reserve currency and ushered in an era of prosperity for Americans as they enjoyed the benefits of being the preferred market for global corporations to sell their wares. Additionally, the inflow of foreign capital into U.S. Treasury bonds has supported low interest rates and a robust bond market.
All that is set to change now as Saudi Arabia is looking to move beyond an exclusive relationship with the U.S. – as evidenced by the kingdom becoming one of the newest members of the BRICS bloc.
While many point to escalating global tensions and shifting geopolitical allegiances as the impetus for allowing the agreement to expire, changes in the power dynamics of the global oil market have also played a crucial role in this development as the world moves towards alternative energy sources. ….
At present, the Kingdom is still accepting U.S. dollars in exchange for oil, but some of the world’s largest economies are attempting to change that, notably China. For years, China has been actively trying to get Saudi Arabia to accept the yuan for oil purchases, and while the Kingdom has thus far refrained from making the switch, they have expressed openness to the idea….
Neenah Payne writes for Activist Post
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