Faced with the growing probability that the US Congress will move
against OPEC in general, and Saudi Arabia in particular, by authorizing
the Justice Department to take antitrust action, the Saudis are threatening an even bigger move, killing the petrodollar outright.
The petrodollar is a major underpinning of the global economy, and one
which has kept the US in a comfortable position with the Saudis. It
refers to the Saudis only accepting payment for oil in US dollars.
Having a currency monopoly on such a huge part of the oil trade is a big
part of why the US dollar has remained strong for decades despite large
US government debt and aggressive growth of the money supply. If the
Saudis end this, it will be a major impact on the global financial
system, and particularly the global currency market.
Saudis are calling it the “nuclear option,” predicting the US economy
would fall apart if they took this step. It’s not clear that would be
the case, but it clearly would be a problem for the US, and one the
Saudis are betting will scare the US away from taking action.
Saudis Threaten to Kill Petrodollar If US Congress Moves Against OPEC
Ending dollar monopoly on oil trade could cause uproar in financial system
Jason Ditz is Senior Editor for Antiwar.com. He has 20 years of experience in foreign policy research and his work has appeared in The American Conservative, Responsible Statecraft, Forbes, Toronto Star, Minneapolis Star-Tribune, Providence Journal, Washington Times, and the Detroit Free Press.
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