Saudi Arabia Ditches U.S. Dollar, Bringing End to America’s Global Dominance

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Saudi Arabia Ditches U.S. Dollar, Bringing End to America’s Global Dominance

Saudi Arabia will not renew its 50 Year ‘Petro-Dollar’ Agreement with the United States as it moves toward a BRICS Alliance, essentially ending the West and U.S. dollar dominance.

In 2018, leaders from the BRICS Alliance met, including Vladimir Putin and Xi Jinping.

Five years later, South Africa’s Foreign Minister Naledi Pandor announced that other nations, including Saudi Arabia, the United Arab Emirates, Egypt, Algeria, Argentina, Mexico, and Nigeria, wanted to join BRICS.

The U.S. dominance on the global stage will soon come to an abrupt end, and it’s no surprise with 81-year-old Joe Biden being openly mocked by the rest of the world.

In 2022, Saudi Arabia announced it was considering accepting the Chinese yuan instead of the U.S. dollar in future transactions.

Yahoo reported:

The U.S. dollar’s dominance is in decline as Russia and Saudi Arabia eye the Chinese yuan for oil trades, and investors may need to begin to revise their long-term investment strategies, warns the CEO and founder of one of the world’s largest independent financial advisory and asset management companies, deVere Group.

Nigel Green warned that the shift in how global oil trading is carried out will have consequences for economies and, therefore, investors worldwide.

“One of the most significant but under-reported outcomes of April’s three-day summit between Russia’s Vladimir Putin and China’s Xi Jinping was that Putin said Russia is now in favour of using the Chinese yuan for oil settlements,” said Green.

“Separately, two deals… would see Saudi Arabia’s Aramco supplying two Chinese companies with a combined 690,000 barrels a day of crude oil, bolstering its rank as China‘s top provider of the commodity,” added Green.

“It has been reported that Saudi Arabia is also in talks with Beijing to settle with the yuan instead of the dollar.”

Tip Ranks reported:

The term “petrodollar” refers to the U.S. dollar’s role as the currency used for crude oil transactions on the world market.

This arrangement has its roots in the 1970s when the United States and Saudi Arabia struck a deal shortly after the U.S. went off the gold standard that would go on to have far-reaching consequences for the global economy.

In the history of global finance, few agreements have wielded as many benefits as the petrodollar pact did for the U.S. economy.

The petrodollar agreement, formalized after the 1973 oil crisis, 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 return, the U.S. provided military support and protection to the kingdom. This arrangement was a win-win situation for both; the U.S. gained a stable source of oil and a captive market for its debt, while Saudi Arabia secured its economic and overall security.

Oil being denominated in U.S. dollars alone has significance beyond the categories of oil and finance. By mandating that oil be sold in U.S. dollars (DXY), the agreement elevated the dollar’s status as the world’s reserve currency.

This, in turn, has profoundly impacted the U.S. economy.

The global demand for dollars to purchase oil has helped to keep the currency strong, making imports relatively cheap for American consumers.

Additionally, the influx of foreign capital into U.S. Treasury bonds has supported low interest rates and a robust bond market.

BRICS News reported: