"The so-called 'petrodollar' system wasn't well understood for most of this time, but a secret deal between Henry Kissinger and Saudi Arabia ensured the dollar would remain the dominant reserve currency."
"The outbreak of war in Iran is exposing America's Achilles Heel, though, as China positions the 'petroyuan' as the obvious successor, and to top it all off, the Saudis quietly killed the petrodollar two years ago."
"Economists warn the currency architecture has been eroding at its edges for years now, and every day the Iran war continues, the cracks in the old system grow wider and wider."
"In 1974, the U.S. negotiated a deal with Saudi Arabia, where the Gulf country agreed only to sell oil in U.S. dollars. In return, the U.S. would provide military aid and security."
The petrodollar system, established in the 1970s through a deal between the U.S. and Saudi Arabia, ensured the dollar's dominance in global trade. However, the ongoing war in Iran and the emergence of the petroyuan signal a shift in this dynamic. Analysts suggest that the 2020s may represent a significant change in the global relationship with the dollar. While the dollar remains dominant, its exclusivity is diminishing as alternative currencies gain traction, particularly in light of recent geopolitical developments.
Read at Fortune
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