The “Petrodollar Pact” between the U.S. and Saudi Arabia, signed in 1974, has been a topic of speculation on social media. However, it is not a formal agreement demanding that Saudi Arabia price its crude oil. The term “Petrodollar Warfare” originated in the early 2000s, suggesting that the US was heading to war against Iraq after 9/11 due to oil.
The petrodollar system remains firmly in place, with countries like Saudi Arabia still selling their oil in US dollars more than two weeks after the collapse of the agreement. Petrodollars are US dollars earned by countries through the sale of oil and other petroleum products, and they have significant implications for the US economy. The term became widely used in the mid-1970s when soaring oil prices generated large trade and account surpluses.
The politicization of dollarization, the American use of the powerful dollar to punish “rogue” regimes, has led to a backlash, but the petrodollar system remains firmly in place. Petrodollar recycling refers to the international spending or investment of a country’s revenues from petroleum exports, generally referring to a commitment by Saudi Arabia to use dollar revenues from oil sales to buy US treasuries.
The history of petrodollar regimes is more complicated, with Algeria, Iraq, and other countries conspiring to raise OPEC oil revenues to produce petrodollars. Informally, the dollar would still be the world’s reserve currency, and oil will still be largely traded in dollars.
📹 The Fake Petrodollar Story – No, Saudi Arabia Didn’t Ditch the Dollar
00:00:00 – Introduction 00:02:54 – What’s a Petrodollar? 00:03:52 – The Death of the Dollar 00:04:36 – The “Petrodollar” Agreement …
📹 Petro Dollar Fake News Alert (Saudi Arabia Oil Agreement)
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Currently in Papua New Guinea. The relationship between the USD and oil is a real issue in this country, as the main fuel supplier for the whole country can’t get enought USD to import fuel stocks. The oil company blames the govt, who blames the central bank, who blames the politicians, who say “everything is fine.” meanwhile the pumps routinely run dry, the aviation sector is held hostage (a problem in country the has almost non-existant road connections) and the power grid is so bad that everyone needs to run gensets, which run on diesel, which is scarce. good times.
As a Saudi Arabian, I frequently encounter online inquiries about the false “petrodollar agreement.” The truth is, Saudi Arabia exports in dollars by choice, not due to any agreement. Our foreign exchange reserves, primarily in dollars, are among the world’s largest, reflecting our strategic interests. Our currency has been pegged to the dollar for the last 50 years and still, because it serves us well. Thank you for pointing out the facts. Peace✌️
USD problem is not about Saudi’s selling petrol in other currencies. The fact is USD is still the global reserve currency, it is weaponized, any country no matter ally or enemy can be sanctioned if it commits anything which the USA does not like. A lot of countries are either slowly ditching USD from their reserves, or cant even hold USD reserves because they are sanctioned. it is just not safe to hold USD or US debt in central banks anymore, not as it used to be. This has nothing to do with ordinary plebs like us, its an issue of global commerce and politics. We keep earning, holding, using USD like nothing happened. But it does not change the fact that the global trade volume in USD is decreasing, mBRIDGE is already in use, BRICS is working on an alternative, some countries has to find other means of payment because they can not use swift system, a lot of countries are looking for other means of payment because they want to avoid the obvious risks involved with USD.
Meh. You’re kind of splitting hairs on definitions. Simple fact is, until recently, Saudi only sold oil in dollars. Then it slowly began accepting other currencies. Now it’s actively accepting other currencies. Whichever way you look at it, this is a net negative for the dollar, as it reduces global demand. It is also a net negative for America as a lower demand makes printing dollars less effective.
The 1974 agreement defacto makes Saudi Arabia only want to sell its oil (mostly) in USDs so it can buy US bonds, so it kinda is the petro-dollar deal. Sure enough there is nothing mentioned about obliging Saudi Arabia to only sell oil in USD, but what benefit there is to get British Sterling from oil to only convert it to USD to buy US bonds or enter the US market as this agreement is showing.. Secondly I feel like the article here missed the point in how grave this agreement was, it really was a deal breaker to the USD back in 1974 to wash out some of the bad reputation and negative sentiment the USD had after dropping it from the gold standard. So it was a huge life saver to the US.
Saudi Arabia is not EXCLUSIVELY selling oil in dollars anymore. So we don’t ABSOLUTELY need to purchase and put Dollars as reserve in the bank. So yeah, this DOES put USD in vulnerable position, especially since there are some countries that are aggressively dumping the dollar. The World Bank itself has the lowest dollar reserve than it did for the last-how many years now?
It’s not that the dollar is being ditched, it’s that other currencies can be used where the dollar was once exclusive. Once upon a time there were more 100$ bills in other individual nations than the United States, read it again if you have to. I think many of us remember growing up perusal various presidents hold hands and kissing King Abdullah of Saudi Arabia specifically because we were so grateful for this agreement. We blunder with Saudi Arabian relations, we are too bellicose and arrogant when it comes to Russia and their Pipeline was destroyed. The rest of the world has worked around us and now have their own deal going because we weaponized the dollar too much. This is a slow bleed, definitely knocked us down several pegs.
I think people completely misunderstood what the various news outlets meant when they said that Saudi has abandoned the Petro dollar deal. The Petro dollar deal means that Saudi trades oil EXCLUSIVELY in USD and the other oil producing states followed. That’s what has changed. USD won’t be abandoned immediately but slowly over time. So far only the interest has been expressed to sell oil in other currencies like Yuan (which in of itself would be an earth shaking news), but the deal made almost 80 years ago that kept this Petro dollar possible is no longer seemingly holding things together. And yes the deal does exist. It was made in 1974. But it was a much bigger deal so it’s not specifically called the petro dollar deal because it includes many things that lead to the formation of the petro dollar. Everyone in economics was aware of it and has been speaking about it for decades. And whether such a deal exists or not, oil trade shifting away from the dollar is the main highlight.
Saudi Arabian army is based on US weapons. There is no way they d risk their defense and policing by cutting ties with the US. After all,this is what USA depends it’s growth on,the defense industrial complex, not production of goods or serviceslike all others.(the only in the world). That’s the reason dollar is what it is,it is backed by the mighty US army/navy/airforce and CIA. So at present, noone can ditch the dollar without risking annihilation
@1:20 While I agree with the general premise of this article, saying the dollar has experienced “a little erosion of its dominance” is extremely misleading. The chart on the screen shows this. Losing 10 percentage points (or the equivalent of -14%) of the dollar’s global market share against other currencies while the Euro and GBP essentially remained flat shows a very sharp contrast. More importantly, the rise of the alternatives is unmistakably strong and persistent. The Ukraine war has definitely made the case in favor of diversification away from the dollar. These kinds of trends are not minor. They are MAJOR developments which cannot be quickly reversed. We are perusal something comparable to what happened to the US auto industry in terms of global domination. The dollar won’t go away and it still will be (at least for the foreseeable future) the dominant global currency, but it is extremely likely that alternatives will eventually surpass the dollar as a group in terms of market share. Again, my disagreement is that you said “a little”, when it’s far more substantial than that.
Most currencies in the world are nearly worthless outside the nation they are used for. For Saudi Arabia to want to trade in a currency other then the global currency, the US dollar, would require the currency to be constantly used by Saudi Arabia, international trade, or give Saudi Arabia sufficient leverage in ongoing negotiations. China buys far more oil from Saudi Arabia then Saudis buy finished good from China, so some of the trade can be done in RMB, but more will stay in dollars. China does not facilitate the conversion of RMB to other currencies and most nations prefer the dollar over using RMB. So excess RMB, holds little value for Saudi Arabia. A Similar trade imbalance happens with India, but some trade in the rupee would likewise be warranted. Neither currency at the moment seem to be valuable to hold long term, as the US dollar has been gaining in strength recently, but that could change over time. The Euro might be a bit of a different story, it has the same recent term weakness to the dollar as the other 2, but the Euro has stability and is Freely convertible to USD. Playing in the Euro may give some economic leverage for the Saudis to play Europe and America in terms of a deal, or it might just prove profitable to arbitrage the currency markets. The fact of the matter has not changed, the US dollar is the global defacto currency for international trade settlements and the Saudis can use the dollar to purchase anything from anyone. It’s still valuable to them to own, they will still need dollars to do the things they need.
great article, I was confused when I saw these articles pop-up and immediately checked the value of the dollar as that surely should see some negative impact. But nope, all was good even days afterwards. Additionally, I didn’t know the Saudi Riyal was pegged to the dollar which makes sense that there is no need for them to really want to move away from USD. Also, all these articles did indeed include a advertisement (usually a long story I skipped) about investing in gold.
In other words economy is fine….. There are no risks like in 2008 crisis. Banks are doing fine, Foreign policy is fine. Stocks just hitting new and new records. Inflation? Accelerating debt accumulation? Nah. US economy is bulletproof. Presidential debates with best of the best representatives….. Nothing can go wrong….
I think you are underplaying the consequence a bit. While losing the petro dollar may not lead to the loss of the US dollar as the global reserve currency it could still make it unstable. What allows the US to freely print money all the time is that there is always a global demand for the US dollar. Imagine what would happen if the US suddenly could not fund itself with more debt because it would cause the inflation to go out of control.
this is a great article. If you want to go deeper into the rabbit hole, look at what preceded this. The 1973 Oil Crisis when King Faisal of Saudi Arabia stopped oil exports to the US. Basically that happens, then the 1974 agreement between US and KSA followed by the assassination of King Faisal in 1975.
The saudis just stooped selling oil in only US dollars which ended on the 9th of June of 2024 the ditching of the dollar comes with the new BRICS currency when it releases the Saudi currency isn’t backed by dollars but by gold which most gulf state currency are and if u look nations like Bahrain 🇧🇭 or Qatar 🇶🇦 their currencies are pretty strong. As long you keep debt out of your country which Saudi hasn’t and is crippling the economy. The future of Saudi is based diversification and using oil wealth to create blended economy that isn’t only an oil economy like what we have seen in UAE 🇦🇪.
Wether there was an actual agreement or not the fact is that most of the the Saudi oil sold from 1974 was in US dollars, so countries around the world had to acquire US dollars in order to purchase oil. The Bretton Woods agreement in 1944 and the Saudi’s preference to sell oil in US dollars made the US dollar America’s number one export commodity. Now the Saudi’s have said they are willing to sell their oil in other currencies such as the RMB, the Rupee, and the Ruble. Nations around the world have options.
The petrodollar was an unofficial, but definitely existing, part of a trade agreement that was recently allowed to lapse. The agreement was implicit because they (the saudis) couldnt have handled the fallout in the 1970s of an official agreement. That doesnt mean it wasnt there. Its like the US defending Taiwan- its not signed but everyone knows its pretty likely. Saying there wasnt a petrodollar is Uncle Sam attempting to save face for letting saudi arabia switch teams now that they’re almost out of oil.
@5:34 “…Economic Cooperation.” That should say enough… it is a matter reading in between the lines. Loss of the agreement means less cooperation and in-turn, US dollar loses leverage if there is less use (less demand)… then devaluation… yadda yadda. Anyone, who has a simple knowledge of economics would know how this pans out. Law of Supply and Demand.
SaudiaArabia has stated that she is open for trade in non-dollar-currencies, especially Euro and Yuan. So I would not be that sure that the hegemony of the dollar will continue forever. Before ww2, the British currency reigned supreme. That is but 80 years ago. So we could well see a major change in the next thirty years from a monopoly to a trade-systems with several important currencies (most likely dollar, euro, yuan and maybe one or two other ones).
You are nominally correct but practically disingenuous. After the agreement which did not mention petrol dollar they sold oil solely the US dollar, after the agreement which did not mention petrol dollar ended they started to sell in other currencies. Also, there is a reason why people call that agreement which did not mention petrol dollar petrol dollar agreement.
According to my AI: Key points of the 1974 agreement include: Oil Pricing in USD: Saudi Arabia would sell its oil only in US dollars. Investment in US Debt: Saudi Arabia agreed to invest surplus oil revenues in US Treasury securities. Military Protection: The United States would provide military protection to Saudi Arabia. Economic and Military Assistance: The US would assist Saudi Arabia with economic development and military aid. This agreement solidified the relationship between the US and Saudi Arabia and ensured a stable demand for the US dollar globally. So there.
In order for Saudi to “ditch” USD, two out of three highly unlikely event in the near-future must take place simultaneously: – US dollar must be unpegged from oil (unless US somehow voluntarily does this, won’t happen) – US suddenly become a non-oil producing country (since US produces more than half the world’s supply on commercial aviation fuel, again highly unlikely). – Saudi Arabia suddenly stops exporting oil (again, highly unlikely in the short term) Considering euro-based petroleum trade does not have big enough market cap, and yuan-based trades are almost always tied with some form of in-kind import/export contract, there still aren’t any major competition to USD when it comes to oil trade.
Propaganda against dollar continues. But dollar isn’t problem or blessing. What the problem is dollar denominated debt. Which is synthetic dollar system (eurodollar system). Which is like a time bomb. Countries are moving from dollar because they cant find anyone to cover dollar transfers, banking is under the stress (dollar shortage). I like that your article tries to explain that. Keep it up.
A. there was an agreement, not all agreements need to be written down. B. yes the dollar was strong in 1975 but 1965 it wasnt, what happened OIL. C. the dollar will lose value, it already has countires are dumping treasuries unlike anything seen before and USD trades have dropped drastically as Russia, China and India have limited USD trades from weopanisation(some of the biggest economies in the world). D. yes this will collapse the US economy, us debt relies on dollar trade fees to withstand interrest on debt.E. the new BRICS currency will be gold standard backed and therefore USD will dumped even worse.
What you are failing to let you viewers completely understanding is that Saudi Arabia was exclusively trading its oil solely in US dollars. Now, by accepting other currencies, the reliance on the US dollar diminishes, and the US will no longer have control over other countries via sanctions as we will not need US dollars to trade, which was not the case before, The Saudi decision to accept other countries, wiil, though not quickly, be a ripple effect with other countries. Also, you say there was not agreement in the beginning of your article yet at 08:00, you say Saudi agreed to sell in US dollars, make it make sense
Yes there is no official rule on petrodollar but Washington is scared because for years Saudi Arabia has done just that. Washington got so scared they had to bring this up in their Saudi Israeli normalization negotiations : “Negotiators could also seek limitations on Saudi Arabia using technology developed by China’s Huawei and assurances that Riyadh will use U.S. dollars, not Chinese currency, to price oil sales,” – wsj 2023
In isolation one can argue its no biggie for various reasons. But a history book will frame this in context of joining BRICS a mere half year prior. To us living through it we all mostly feel like the end of 2023 was ancient times. In historical terms, joining BRICS and then widening its currency trading range (pegged to the dollar however they may be) will be seen as part of the same larger trend. In another half year another shoe might drop. The story is still a real story, but has been massively overhyped. Dollars are also essential in the Eurodollar-yen trade and settling international debts. But the dollar got to that point because of the Petrodollar status. Its not possible to determine if the dollar will remain as widely used in the future when it is now trending downwards in major economies, from Japanese banks starting to dump treasuries to the international market no longer buying. It will be interesting to see where it goes.
you are correct the deal was for saudi to purchase treasury bills with excess revenue in selling for dollars now saudi is just not going to buy treasury bills any more now they are spreading into other capital ventures like brics and positioning on both sides us/china entering new developing markets not cutting away just expanding.
given that crypto heads want crypto to both be currency and also be an amazing investment, my question is why don’t we just pick a major etf to be our currency? Could be spy, vti or even vt to get global buy in. We would still have usd but it would serve in more of a backend role as an inflation pegged thing.
There is no paper agreement called the petrodollar, but there is a pledge from both countries on the idea of the petrodollar. What made the two countries confident that no party would violate this agreement is that it is a tremendous gain for both parties. Meaning that there is no such thing as renewal every 50 years, but there are Saudi intentions to abandon the idea of the petrodollar and the reason is America’s violation of its part. By the way, if Saudi Arabia abandons the petrodollars, America will gradually lose 7.5$ Trillion
Correct me if I’m wrong, but if the world left the dollar as the reserve currency over night, it would lose value, thus the oil futures contracts would massively increase in value, so Americans who held open commodity contracts or foreign stocks everywhere on earth would suddenly surge due to the exchange rate of every currency against the dollar. So if we go off the dollar overnight we’ll make billionaires of oil industry mogols, entertainment, foreign bonds of all kinds, and property in an instant. The wealthy of the country could hugely benefit from this if they’re diversified, only the bottom 70% of the population not owning any foreign stuck would suffer from this… In fact wages and everything would plummet relatively, making everything cheaper for the billionaires who quintupled their tax-preferred foreign investments, enabling them to scoop up middle class property as it dropped in value absent buyers at fair market price due to increased costs if personal imports like clothes, food, and now oil. This would be a huge transfer of wealth if it ever happened, imho. That risk isn’t worth the benefit of exporting inflation, rather pay what you owe every year rather than defer under the sword of Damacles in perpetuity.
No but they are exchanging in other currencies, to which will have a effect. The world can’t just ditch dollars overnight but the US is giving everyone a reason to accelerate the process through other means. Nobody wants to get sanctioned or have their gold or reserves stolen. The reality is the US is doing it to itself.
Its funny to listen to Petrodollars and other countries currency then hear loonie and as someone living with the iron socks of Trudeau on my throat it really threw me for a loop when you followed that up by talking about Enbridge (Largest energy transport company in all of north america)….. then to see on the screen that it just sounds like Enbridge.
if u know how to read a graph, dollar reserves are reduced to 52%, earlier in 2000s it was 70-80% saudi also sided with russia during a failed peace summit of west Saudi future plan is : usa: i wantt oil, saudi : here is ur oil in usd india : i want oil, saudi : here is ur oil in rupees china: i want oil, saudi : here is ur oil in yuan earlier it was all usd
I’m not sure this analysis is entirely correct. If you are debating semantics, I can understand where you are coming from. If there is no evidence of any contract defining a term, what exactly has to be renewed? I totally get that logic. Yes, there was an agreement. However, I think the definition of an agreement seems confusing to some. Not all agreements by states are documented. There are different agreement forms, especially when obfuscation is part of the agreement for whatever reasons. Without that “agreement,” the US economy would have nosedived after Nixon moved away from the Gold standard. This analysis did not touch on why there was this “agreement” in the first place. This “agreement” goal was to neutralize crude oil as an economic weapon and simultaneously help the American economy. In exchange, the US guaranteed the kingdom’s security and provided them with weapons. Saudi Arabia also had its economic interests. Additionally, this analysis should have touched on the trends of the US weaponizing the dollar and frustrating the global south to look for alternatives. The US debt-to-GDP ratio is outrageous, but for its hegemony, no one will be using the currency. Countries are waking up to the fact that the US exports its Inflation to other countries, and who pays the price? Countries in the global south, which is another reason to urgently look for alternatives. It did not touch on the US’s real economic issues or the fact that the “perceived” trust of the US government is grossly diminished globally; there is a reason why the Global South is consolidating against Western Hegemony.
The global reserve currency is the dollar, but the global economy is made out of the West and Russia and China, and if Russia and China are willing to abandon the dollar and create alternative financial systems that will eventually change the weight and the role of the dollar especially if the US keeps adding trillions of dollars to their national debt and to the budget of the pentagon. Also you use IMF data as if the IMF would not have a serious bias for the dollar.
The main problem is the US dollars coming back to the USA. Without needing to first convert to USD, there is no need for a financial institution to do an immediate conversion at whatever local currency may be used. No floats of USD needed, even digitally. Which is very inflationary for everyone inside the USA, and opposite for everyone else. You cannot export inflation by printing USD if they don’t use USD in everyday transactions of 7.3 million barrels of oil. As of now, printing USD will most likely inflate a Taylor Swift concert ticket to $1,500 from $1,100 as an example, as you can not easily use that first “completely free” printing as easily to get Saudi oil.
The reality is that Saudi Arabia has been selling oil and agreeing on prices in other currencies for a long time. There probably was a deal for Saudi Arabia to sell oil only in USD….or mostly in USD. Allies of the US could set prices with Saudi Arabia and buy oil in their own currencies. The USD is losing influence overall. Its influence will diminish in time.
Oh come on! That’s so boring! Doing proper research on this agreement? Put it in perspective? Accepting that some claims might go into the right direction but as a headline are clearly false? No screaming?! No End-of-The-World-Title?! HIHIHIHI, just kidding, love your website for EXACTLY THAT 👍! Explaining things with your professional background, putting things into perspective, not hesitating to say “Yes, there is a tendency of many countries trying to weaken the dollars dominance for political reasons”, but then making it clear “That’s not what this is all about”. Thx!
its funny because this article is easy to debunk. yes Saudi arabia is ditching the dollar in the future. for now they use other currency to trade their oil Yuan being one of them. but they are shifting away from the Dollar. it takes maybe a little time but they are thinking about it. in fact they are thinking about it to join BRICS. should say something as well. US is played out love to see it
It doesn’t matter whether the “petrodollar agreement” exists or not. The point here is that it remains a fact that this decision will give other currencies opportunities to be used for purchasing oil, and would have a long term effect in the dollar’s value in the global economy. It will not be immediate, but overtime, the dollar value will diminished if the dollar is, for example, replaced by another currency for purchasing oil.
This is actually kinda sad, there are certain misrepresentations in the article : 1. Point of the story whether there was an agreement or whether the dollar is going to be dumped. Point is is saudi going to sell its oil in other currencies. 2.Inertia argument is stupid. How did this inertia come into being?was it maybe that the largest oil producing state choosing that currency which set a benchmark for global trade. 3. Choosing to completely skip over how the US is trading its reserves purpose fully to keep the price down while saudis are trying to boost it back up, is downright criminal in my opinion.
Saudi is between a rock and a hard place to some degree and for me it is currently inconceivable that Saudi will dump the dollar but they are very measured horse traders and will do what benefits most and in the short term if they dump the dollar I would say this will seriously effect there oil production as approx %92 of critical production equipment is US made and an upset or “sanction” by the US would be financially very painful. I do see a “gravitation” towards alternatives but this is not like just changing your socks it will run into trillions, a number even the Saudis pay serious attention to.
If I was selling oil I’d want it in U.S. dollars because it is the most stable currency. It seems that on Mondays, Wednesdays, and Fridays there are stories by the usual suspects about the eclipse of the U.S. dollar while on Tueday and Thursdays there are stories about some country ditching their currency and going to the dollar.
You are going into technicalities without understanding the overall global direction. It’s definitely not time to panic. But US’s free power to export inflation to other countries by printing and exporting dollars to them is decreasing. And it’s a matter of few decades when the shift is going to happen. Just keep your eyes open.
5min30: “the agreement does not even contain the words petro or oil”. At 5min53 we read “oil price increases gave Saudi Arabia a substantial amount of petrodollars . Your lie lasted less than 30s before you contradicted your own claim. 6min30 you repeat the lie : ” the agreement is only 6 pages and says nothing about the petrodollar . Well apart from the two lines you just showed underlined in red ink !!!
It doesn’t really matter if there was a written agreement with the Saudis regarding the petro-dollar or not. The US historically disregards any of it’s written agreements/commitments the moment they are no longer self-serving. ie: Treaties with Native American Tribes: (1800s) Treaty of Versailles: Anti-Ballistic Missile (ABM) Treaty: Paris Climate Agreement: Joint Comprehensive Plan of Action (JCPOA): Intermediate-Range Nuclear Forces (INF) Treaty: The only difference geopolitically now from before is that the rest of the world has figured this out.
lol let’s be real Richard something like this wouldn’t need an agreement. It would be tacitly implied. Dollar use for weapons and protection. Not a surprise during that same period the gold was also being phased out. So what better to back the dollar on than an easily accessible commodity everyone relies on. Remember that was gold till it wasn’t.
Could you image if the anti US forces got their way? Let’s abandon this central secure currency from a country that expounds free trade and easy economics. It would make any international transactions a nightmare. Image the thousands of individual parts needed to made say a computer sourced from all over the world and having to pay for each item in a different currency. Image not being able to procure resources simply because you don’t have enough Canadian dollars because instead you bought Mexican pesos.
Early in the 1970s, the U.S. government provided economic aid to Saudi Arabia, its chief oil-producing rival, in exchange for assurances that Riyadh would price its crude exports exclusively in the U.S. dollar. In 1975, other members of the Organization of Petroleum Exporting Countries (OPEC) followed suit, and the petrodollar was born.
The Dollar used to be backed by gold. Then the gold got severed. Then the dollar was backed by oil. Then the oil got severed. Now the dollar is backed by debt and consumer confidence in the government. Well, my confidence in the government is gone and I’m at my personal allowable debt limit. Next stop, dollar collapse.
Interesting. The US Marine fight song begins “From the Halls of Montezuma To the Shores of Tripoli”, and as stated, we have had military and economic ties with Saudi Arabia since the end of the Ottomans in 1918. I thought the agreement dated to the Establishment of the Oil Company Saudi ARAMCO in 1941, and Saudi drilling even earlier, which would be Franklin Roosevelt and American Oil companies. The Petro-Dollar being an unwritten handshake agreement, maintained in the same way! As long as the dollar was strong, it worked well for both countries, but now, with the US 34 Trillion in debt and printing, gold, Bitcoin, wheat, copper, land, anything might be better for Saudi Arabia than dollars, but it doesn’t pay to harm your biggest customer so the Saudi’s will dump the dollar slowly.
Brian I want to thank you for keeping it real 🙏 I’m semi-retired the only money I owe is my mortgage and have excellent credit. Been perusal you the last couple years and you have helped me reevaluate and prepare for the future the best way I can. Thank you again, from the great state of Tennessee.
Weimar Germany, Hungary, Zimbabwe, and Yugoslavia now stand as infamous examples of fiat failure, but it is important to remember that these governments did not intend to inflict such economic destruction. It has been said by establishment approved historians that policymakers genuinely thought money printing would solve their problems.
Interesting take Brian. How there wasn’t an actual existing agreement. However, it is fact, that at times up to 80%/90% (slightly less nowadays) of global oil transactions were conducted in US dollars. Which in return, created a demand for the dollar and allowing for our risky monetary policy over the years So i am curious on the reasoning/connection
The fact of the matter is, the dollar is progressively losing its dominance on the world scene and it is directly related to the US foreign policies. Banning countries from Swift and sanctioning their economies will not endear these countries to pursuing any continual relationship with the dollar. So irrespective of whether this 50 year deal is legit or not is not that crucial.
People blame politicians for their reckless spending. However, people should blame themselves for putting those politicians in the office. Any politicians who runs on getting our debt under control will not get enough votes to win because taxes need to be raised or spending needs to be cut. Politicians who want to cut taxes or hand out free money are the ones most likely to win which puts us farther into debt.
Where did the Saudi gets the USD to recirculate in the US economy? The objective is to recirculate the USD in the US economy. If the Saudi sells its oil in some other currencies, such as the Yuan and the Pesos, how does the Saudi use the Yuan and the Peso to circulate in the US economy. Everybody knows that Oil prices is always quoted in USD, never in Yuan or Pesos or not even in Saudi Riyal.
Indeed, no document was ever signed to dictate oil quotes ONLY in US dollars. Quoting only in US dollars was just an outcome of the entire business process. Saudi Arabia’s recent decision and BRICS will speed up the reduction of demand for the US dollar. The US dollar will still be very important for many years when investment trades are in the US dollar.
There was indeed an agreement signed between the United States and Saudi Arabia on June 8, 1974, but it was not the “petrodollar deal” as commonly misrepresented in recent social media reports. The actual agreement was the United States-Saudi Arabian Joint Commission on Economic Cooperation. This agreement was primarily focused on economic cooperation between the two countries. Its main purposes were: 1. To allow Saudi Arabia to use its growing oil wealth to invest in and industrialize its economy beyond the oil sector. 😮
You just said the amount of foreign currency that would be coming to SA would be too much for them to absorb. So of all the countries the US decided to absorb US dollars for them so they don’t get overwhelmed. Other countries didn’t offer this because they didn’t want or couldn’t do it. So in as far as there was no written agreement to sell in USD, the fact is implied because it they sold in any other currency they wouldn’t have had this recycling facility extended to them.
Investopedia: Petrodollars are crude oil export revenues denominated in U.S. dollars. The term gained currency in the mid-1970s when soaring oil prices generated large trade and current account surpluses for oil-exporting countries. Then as now, oil sales and the resulting current account surpluses were denominated in dollars because the U.S. dollar was—and remains—by far the most widely used currency. The U.S. dollar’s global popularity does not depend on the good will of oil exporters. It is based on U.S. status as the world’s largest economy and goods importer, with deep, liquid capital markets backed by the rule of law as well as military power.
There are three main banking centers: London,Paris,Zurich That was then, this is now. The agreement was for Military leverage against Saudi enemies, and to alleviate the financial vice the Oil embargo the U.S. was stuck in. Also,LBJ sold off the gold reserves that backed the US dollar. Nixon had to do something to maintain the illusion of US currency. . .
Congratulations Brian, you are understanding the true nature of the matrix. The problem is that you are trying to educate the people who are desperate to defend this altered reality. It’s already game over and the only thing we should be focusing on is our relationship with the Creator and His Son. Anything else is wasted time.
However, after 50 years, Saudi Arabia has now decided not to renew this petrodollar agreement when it expired on June 9, 2024. This allows Saudi Arabia to sell oil in currencies other than just the US dollar, potentially weakening the dollar’s dominance. Because they don’t honor their own currency they print new dollars out of thin air its literally useless to live under these circumstances.
The funny thing about this is Saudi never sold oil in anything except dollars. That’s why at one time almost 80% of all world oil trade was in dollars. If there was or wasn’t a solid agreement date doesn’t matter Because recently Saudi in Jan 2024 joined the BRICS financial bloc And more recently announced they would sell oil in other currencies as well as dollars. To me this means like any good smart business they are giving everyone more options and choices as BRICS prepares to leave the US dollar SWIFT based financial system Yes folks the dollar system won’t be the world currency much longer. Let’s face it. How many countries are going to keep funding our money and funding the wars they pay for themselves ? It’s over people
8:51 Yeah I get that you’re on our side but this “we” stuff ain’t it. You do not live paycheck to paycheck like I do. Yes, I hate this system and want to see it gone. I rather live in the woods than work all my life just to have it amount to nothing. Sorry to take my frustrations out here like this but I am super done with this.