Saudi Arabia ends 80-year petrodollar deal with US.

[Fiatless]

The Kingdom of Saudi Arabia has failed to renew the agreement that mandates the country to conduct all oil transactions in dollars and invest its oil surplus funds in U.S. Treasuries in exchange for U.S. military support. The agreement expired on June 9, and there is no indication that SA wants it to continue. This opens the door for the Saudis to sell oil in currencies other than the dollar.

This move might be because of Saudia Arabia's membership in the BRICS bloc and its economic shift to other countries like China, Brazil, and others. There has also been some political disaffection between both countries. The petrodollar deal is one of the reasons why the dollar is a popular currency in international trade especially in the oil and gas sector. Therefore the end of the petrodollar deal could accelerate global de-dollarization and that would be a disaster for the U.S. economy.

There has been news about some countries pushing for de-dollarization of the global economy but this move by Saudi Arabia seems to be a big boost to that goal.


https://www.google.com/amp/s/www.fxstreet.com/amp/analysis/the-petrodollar-is-dead-and-thats-a-big-deal-202406141938

[_act_]

The US has been very centralized and sanctioned some countries which some countries do not like and it is leading to de-dollarization. Some decentralized money like bitcoin would have been better to be the world's dominant currency.

But most of this countries do not know the plan of China. I hope they will know that China is trying to have the world power and shift the power from the West to themselves. Countries like Russia and Iran also want that.

[pawel7777]

I expected this to have a big impact on stock markets and, by extension, on cryptocurrencies, but, so far, nothing significant has happened, other than USD dropping a bit.
Could it be that a weak Dollar is actually good for US companies, and US indices could still hold strong despite the US slowly losing its dominant geopolitical position?

[Solosanz]

There has been news about some countries pushing for de-dollarization of the global economy but this move by Saudi Arabia seems to be a big boost to that goal.

Possibly, but let's see how it goes, especially there are many people that boycotting companies that supporting Israel.

I expected this to have a big impact on stock markets and, by extension, on cryptocurrencies, but, so far, nothing significant has happened, other than USD dropping a bit.
Could it be that a weak Dollar is actually good for US companies, and US indices could still hold strong despite the US slowly losing its dominant geopolitical position?

There's always a person that panic selling when they see any news comes up, but actually this almost have no impact since US do export their petrol and Saudi Arabia isn't their main petrol importer. By logic, they will not export their petrol if they're in need.

    The top five sources of U.S. crude oil imports by percentage share of U.S. total crude oil imports in 2022 were:
    Canada60%
    Mexico10%
    Saudi Arabia7%
    Iraq4%
    Colombia4%

[tsaroz]

The world is getting more polarized, economically and politically. US being the tactical winner of the 2nd world war and the cold war have had controlled most of the economic relations in the world that are policy wise favorable to them. But with current time of multi polarization and decrease in the influence of US, the world is questioning the current economic model as well the rules. US uses money as a weapon. The way they have sanctioned nations and just have had shameless theft has made nations around the world realize that its an unfaithful partner. Crypto seems to have been gaining more trust than USD at current situation. 

[PhillipDe78]

It looks like the dollar is being kicked out of the oil club. Will this become a trend in the future?

[passwordnow]

A big loss for the US. Saudi Arabia is one of its back assists while the dollars has been so powerful but whoever supports Saudi Arabia this time will surely gets a helm of its power and influence. It's the same as the deal of Russia and India, where China and India have got some territory disputes but even if they're allied with Russia, Russia is giving that favor to India for allowing them to buy their oil. This is all about the global politics that US is doing. I guess that Biden won't win a second term for his seat if this is keeps going on.

He's creating chaos to the world instead of being a helper to every nation and to make some balance. But this time, it's not them that does it but BRICS, of course China is there and Russia who have been their enemy. It's also recent that Russia has declared US as their enemy for the first time. Two big producers of oil are no longer with them. The gas pipeline from Russia to European countries has also been blocked, right? Wow, what Saudi's gonna do with this is going to be a world turnover and is definitely being tuned in by most countries that are big oil consumers, well who's not?

[Reatim]

This will definitely create a huge shift in the political and economical scene. US's position in middle east is surely affected and there would be other things I am sure the white house is having headaches over.

Setting the effects on the US's political and economical grounds aside, it seems that Saudi Arabia is seriously considering other currencies even bitcoin.

With the deal's expiration, Saudi Arabia is now free to sell oil for currencies like yuan, euros, rubles, and yen, and is considering digital currencies like Bitcoin.

This news will have detrimental effects on stock prices which will shift positively towards bitcoin so we should be ready as its price may rise due to many looking for alternative assets.

[Iranus]

But most of this countries do not know the plan of China. I hope they will know that China is trying to have the world power and shift the power from the West to themselves. Countries like Russia and Iran also want that.

The struggle for power and personal interests will never completely disappear when it comes to politics, and other countries are well aware of the intentions of China, Russia or the BRICS bloc. But because the monopoly and arrogance of the US government has made the whole world tired and disgusted, many countries are looking for opportunities to make the world more fair and have more choices instead of one dictatorial world.

The polarization of the world is necessary because it will create many opportunities for smaller countries to develop as well as have the opportunity to express themselves without being oppressed and exploited by imperialists. The world will be fairer when domination is no longer concentrated in a single country.

[348Judah]

The Kingdom of Saudi Arabia has failed to renew the agreement that mandates the country to conduct all oil transactions in dollars and invest its oil surplus funds in U.S. Treasuries in exchange for U.S. military support. The agreement expired on June 9, and there is no indication that SA wants it to continue. This opens the door for the Saudis to sell oil in currencies other than the dollar.

If we are going to look from their own side, Saudi Arabia have their own reasons for doing this, there are times in which we make discovery of the relationship we had with other countries under a signed agreement as no longer being beneficial to us after a thorough investigations on what is being earned and lost along the way, if they think it's time to stop the sale of oil and begin to earn in other currencies, they would have seen how dollarization has being winning over their local economy and financial currency, maybe want to engage on a new approach now.

[bittraffic]

Which currency will replace PetroDollar?
It's been in the news that Saudi is joining BRICS which means they may be accepting any currency or just the most widely used still.  So far the most used currency still is USD and the next is Yuan so there are just 2 options they have unless they are just going to accept the Saudi Riyal to improve the demand for its currency.

Are they even open to using BTC?

[Barikui1]

The Kingdom of Saudi Arabia has failed to renew the agreement that mandates the country to conduct all oil transactions in dollars and invest its oil surplus funds in U.S. Treasuries in exchange for U.S. military support. The agreement expired on June 9, and there is no indication that SA wants it to continue. This opens the door for the Saudis to sell oil in currencies other than the dollar.

This move might be because of Saudia Arabia's membership in the BRICS bloc and its economic shift to other countries like China, Brazil, and others. There has also been some political disaffection between both countries. The petrodollar deal is one of the reasons why the dollar is a popular currency in international trade especially in the oil and gas sector. Therefore the end of the petrodollar deal could accelerate global de-dollarization and that would be a disaster for the U.S. economy.

There has been news about some countries pushing for de-dollarization of the global economy but this move by Saudi Arabia seems to be a big boost to that goal.


https://www.google.com/amp/s/www.fxstreet.com/amp/analysis/the-petrodollar-is-dead-and-thats-a-big-deal-202406141938

Actually it's no longer news that the united state of America has been using the dollar as a weapon against most of the rival countries that has opposed their way of doing things, or countries that has refused to concur to do their biding, so on that note, most of this nations are shifting away from the higher dependence on dollar, on international trade.

so I believe that this move is just one of the result of the weaponisation of dollars, by the American, because before now, Russia, china and most of the Brics nations has shifted away from dollar usage in the international market, and I think it's actually going to devalue the dollar the more, because every day different nations are doing the same, which isn't a good one for the continued dominance of the US dollars.

So  till the Americans shift away from the policies of weaponising the dollar, I think that the devaluation of the dollar will continue.

[peter0425]

But most of this countries do not know the plan of China. I hope they will know that China is trying to have the world power and shift the power from the West to themselves. Countries like Russia and Iran also want that.

I think all countries know that all of them have an agenda not only to help the weakening of the us dollar but to gain power to themselves. The organization is just a stepping stone but will soon be left aside when it is time to decide who shall replace US to the top.

I don't think any country is willing to be played like a toy. Most likely they are all playing a game secretely.

[electronicash]

they are not preventing it from happening though, my guess is that they allow this to happen by plan. and i mean they could still make a deal with the Saudis, they are not enemies after all but from what i have read on some news sites is that Saudi asked to stop the war in Gaza and the nuclear program, but they likely not come to terms with such condition which Saudi and US ended the petrodollar agreement.

from what i know the BRICS is up to launch the CBDC for countries which they call the mBridge which all countries can use to make transactions not just the BRICS countries. https://en.wikipedia.org/wiki/MBridge

[Fortify]

The Kingdom of Saudi Arabia has failed to renew the agreement that mandates the country to conduct all oil transactions in dollars and invest its oil surplus funds in U.S. Treasuries in exchange for U.S. military support. The agreement expired on June 9, and there is no indication that SA wants it to continue. This opens the door for the Saudis to sell oil in currencies other than the dollar.

This move might be because of Saudia Arabia's membership in the BRICS bloc and its economic shift to other countries like China, Brazil, and others. There has also been some political disaffection between both countries. The petrodollar deal is one of the reasons why the dollar is a popular currency in international trade especially in the oil and gas sector. Therefore the end of the petrodollar deal could accelerate global de-dollarization and that would be a disaster for the U.S. economy.

There has been news about some countries pushing for de-dollarization of the global economy but this move by Saudi Arabia seems to be a big boost to that goal.


https://www.google.com/amp/s/www.fxstreet.com/amp/analysis/the-petrodollar-is-dead-and-thats-a-big-deal-202406141938

This is less about the decline of Americas power and more about the decline of Saudi Arabias power. It's been claimed recently that peak oil could be just 5-6 years away and oil is the only power that Saudi has over anything in the world. Yet America's oil boom has neutralised some of their negotiating ability because they used to be able to strangle the US economy if they did not play along. We've seen that the dictators in charge of Saudi Arabia are not good people, one of the first things he did after getting into power was to murder a journalist in an embassy in Turkey. The sooner Saudi loses any ability to manipulate politics or bully trading partners, the better.

[pooya87]

I saw this news this morning and I wanted to start a topic about it but I couldn't because I'm very suspicious of this move...
I may be wrong but it feels like a very political and yet empty move.

Let me explain.
The Al-Saud dictatorship still depends on United States for its survival as the illegitimate usurpers of Arabia. Specially when as "خادم الحرمین" (Custodian of the Two Holy Cities of Islam) they tend to shake hands with the enemies of Islam (ie. the Zionists that are ethnically cleansing Muslims these days) and insist on "normalization"!!!
They pretty much need US regime to keep them in control and make things go away when they for example chop up an American journalist into little pieces!

When you put this along the other stuff that has been happening between US and Al-Saud dictators, we can make the same conclusion as well.
For example over the past year or so, the Al-Saud dictators have been pressuring US regime to give them more "modern" weapons, certain technologies including nuclear tech. and other stuff and US regime has been refusing.
The reason why I say this is an empty political move is exactly this. They may be only "playing their cards" and putting pressure on US regime to change its decision about giving them all that stuff.

This is not the first time either. They've made other empty gestures by getting close to China and Russia as well. Like selling a small amount of Aramco shares to China, buying some stuff from Russia, etc. Nothing big enough to make a change though. Nothing that can even be categorized as "getting close" to the Eastern Bloc.

This is definitely an interesting development and we have to watch how things change over the next year to be sure. But for now, I remain skeptical.

[moneystery]

It looks like the dollar is being kicked out of the oil club. Will this become a trend in the future?

this does not mean that the arabs ending this agreement means that the usd will not be used in global oil trade, the usd will still be used in global oil trade, especially in trade that is directly related to the us and its allies. maybe in some countries they prefer their local currency to complete transactions, but believe me there are consequences that they will receive if they move from usd, it could be in investment, military, or in other fields.

[jrrsparkles]

Which currency will replace PetroDollar?
It's been in the news that Saudi is joining BRICS which means they may be accepting any currency or just the most widely used still.  So far the most used currency still is USD and the next is Yuan so there are just 2 options they have unless they are just going to accept the Saudi Riyal to improve the demand for its currency.

Are they even open to using BTC?

There are many fiat apart from USD, for example, euros can be used for Yuan, Yen and who knows it might be BTC too.

This is a sign that the USD is losing its dominance and so called superpower, but this may not affect the entire system but what if every government follow the same path soon it is going to be a huge loss for US and people who trusted USD as the strongest fiat and this is beneficial for the cryptocurrencies cause if those international trade requires something that has fair value on the market and not influenced by centralized entity then BTC can be considered as an option.

[kentrolla]

USA needs to review its foreign policies and check where they are going wrong with their allies because Saudi was a closest ally of USA, it other countries starts following the same this will have huge impact of dollars value. China and Russia are isolated is what we are taught to believe but things are going in opposite direction and the sooner they realise and fix the problem out would5 be better.

[Kavelj22]

I saw this news this morning and I wanted to start a topic about it but I couldn't because I'm very suspicious of this move...
I may be wrong but it feels like a very political and yet empty move.

Let me explain.
The Al-Saud dictatorship still depends on United States for its survival as the illegitimate usurpers of Arabia. Specially when as "خادم الحرمین" (Custodian of the Two Holy Cities of Islam) they tend to shake hands with the enemies of Islam (ie. the Zionists that are ethnically cleansing Muslims these days) and insist on "normalization"!!!
They pretty much need US regime to keep them in control and make things go away when they for example chop up an American journalist into little pieces!

I agree with your opinion, and I also do not believe in the feasibility of this step by Saudi Arabia regarding de-dollarization.

This may seem like a big step and it certainly has explanations, but it has nothing to do with de-dollarization since Saudi Arabia will not be able to stop using the dollar to sell oil. Even if it succeeds in reaching an agreement with its new allies within the BRICS (China and Russia in particular), it will not be able to continue selling petrol against the yen and the ruble because it simply does not have much to do with them. The dollar is the currency of the global economy, and Saudi Arabia is forced to use the dollar in all its other commercial exchanges, given that China and Russia will not provide it with everything it needs from the global market so that it does not need to use the dollar.

The most logical reason is the change in Saudi Arabia's policy, which seeks to reduce its dependence on oil and thus diversify its income by relying on new sources such as tourism and agriculture. Not renewing the contract with the United States may be due to the Kingdom of Saudi Arabia’s intentions to reduce production, and therefore it does not renew any contracts that might prevent it from doing so.