The US-Saudi Petrodollar deal established on June 8, 1974 was an agreement through which Saudi Arabia agreed to trade crude oil in US dollars in exchange for military equipment and assistance from the US.
The term "petrodollars" refers to the US dollars earned by oil-exporting countries through the sale of oil.
However, upon lapse of the deal on June 9, 2024, Saudi Arabia refused to renew it. This sparked concerns in the global financial markets regarding the strength of the US Dollar.
Saudi Arabia is now free to trade crude oil in any currency it chooses to and is no longer bound to use US dollars.
According to MSN, The petrodollar’s expiration could weaken the US dollar and, by extension, the US financial markets. If oil were to be priced in a currency other than the dollar, it could lead to a decline in global demand for the greenback.
According to AMB Crypto, Gold and Bitcoin are the best hedge from the non-renewal of the Petrodollar deal.
Reports suggest that lapse of the deal might accelerate the trend of using alternative currencies such as Bitcoin for international trade and weaken the US dollar's global dominance.
Published 14 June 2024, 17:34 IST