Is The Petrodollar On Its Last Legs?
It is uncertain if the petrodollar is on its way out, but it is sure coming under threat. The petrodollar system refers to the practice of pricing and trading oil in us dollars . This system has been in place for several decades and has provided major global demand for the US dollar.
However, there have been recent indications that some countries, such as China and Russia, are looking to challenge the dominance of the US dollar in the oil trade and beyond. This could potentially lead to a shift towards other currencies being used for oil transactions, such as the Chinese yuan, the Russian ruble, or the proposed BRICS gold stable coin.
Russia, China, And Saudi Arabia Moving Closer To Drop Petrodollar?
There has been much speculation in recent years about the potential decline of the petrodollar in geopolitical circles, but it has yet to be openly discussed between leaders. However, as the world becomes more fragmented, the discussion has become more prevalent.
Recently, former NY Fed repo expert Zoltan Pozsar wrote a report outlining how Russia, led by President Putin, could disrupt the Western financial system by demanding payment for oil exports in gold instead of dollars. This would effectively link oil to gold and create ‘petrogold.’ Pozsar’s report highlights the damaging reality the US faces if the petrodollar collapses.
In addition to Zoltan Pozsar’s report highlighting the potential disruption of the Western financial system, China’s President Xi further solidified China’s influence over opec+ ‘s oil and gas reserves during a meeting with Saudi and GCC leaders. This was marked by Xi’s remarks about the emergence of the ‘petroyuan,’ which fortifies China’s growing power in the oil trade.
Header featured image (edited) credit: Dollar/orginal Pozsar report
Emphasis added by (TLB) editors
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