Hey folks, hope you’re all doing great. For over 50 years, the global oil market has been dominated by what we call the petrodollar system.
Back in 1974, an agreement with Saudi Arabia set the stage for oil trades to happen in US dollars. Since oil is a key energy resource, countries had to stockpile a lot of US dollars just to buy it.
This setup has bolstered the dollar's role in global finance and allowed the US to keep a significant grip on the international economic scene.
But now, we’re seeing some interesting moves from Iran.
Iran is drawing attention to the Strait of Hormuz, which is one of the most crucial energy pathways on the planet. Approximately 20% of the world’s oil supply flows through this narrow channel, which is only about 33 km wide and has a small lane for tankers.
Every year, oil valued at around $1 trillion passes through this area.
Key oil importers relying on this route include China, India, Japan, and South Korea.
Iran has suggested that oil transactions linked to this route might happen in Chinese Yuan rather than US dollars. If this trend gains traction, it could shake up the traditional practice of pricing and trading oil predominantly in dollars.
Countries like China and Japan also hold significant amounts of US Treasury bonds. So any change in how oil payments are made could have a big impact on how these countries handle their reserves and financial strategies.
This discussion goes beyond just oil. It’s about energy routes, currencies, and the balance of global economic power.
Petrodollar System Under Pressure? Well yeah atleast for now
Did you read the news that Iran is negotiating with at least eight countries to allow their oil tankers through the Strait, but only if the oil is traded in Chinese Yuan. If this implemented for long period of times than petrodollar gonna shake a little bit.
The next PetroDollar is PetroYuan in my opinion, because China economic itself is massive bullish
I think it's about nine ships actually which are mostly from friendly countries like China and India. In as much as I would like to see PetroYuan come on board, we have to admit that petrodollar is not crashing yet. The oil passage on the Strait of Hormuz is strictly based on negotiation and of course under Iran control but there is no yet condition of Chinese Yuan attached to pass through the Strait of Hormuz. The truth is Iran is under sanctions for long now and this make them to always avoid dollar system trades. China uses Yuan to trade with countries like Russia and Iran to promote their currency and that's what's happening right now, it's nothing new.
Absolutely, the petrodollar is very much an inflated economy, if this fails there will be quite a large affect
on the US economy and in turm possibly the global economy at least in the short term.
https://arongroups.co/technical-analyze/petrodollars-system/
If oil no longer is bought and sold in US dollars and instead lets say the Chinese Yuan it obviously shifts
global currency to the Yaun away from the dollar. Away from a country which isnt a manufacturing
economy any more to a country which is largely a manufacturing economy. So many things at play ATM.
True if i dont mistaken the world is still "consume" the US Dollar around 60% of world transaction is still happen using USD. If and big IF PetroYuan really hits the market this not just gonna shake the US but also the world too. I also hear about BRICS are going to made a new currency backed by gold.
Chinese in my opinion still early and if they grow would be much crazy than US IMO
Iran wants to trade oil with Chinese Yuan? United States of America will be so weak to agree with the terms, this idea might be coming from China, allegedly supplying Iran with long range ballistic missiles. Today News also came that Iran and United States has come to agree terms and there's going to be a 5 days seize fire, whereas another news came out from the Iranian side, the Iranian foreign minister stating that no talks with Washington yet and accuses the US president Donald Trump of buying time amid the regional de-escalating efforts.
I would like to agree with your opinion this time the petrodollar will gonna be under pressure even that is in small amount.
And since this is the first time that there is going to be pressure on the petro dollar, I think it will continue to increase in the future. It is a lot like lighting a small firecracker in a warehouse with a single petrol. I am saying this because America has not allowed anyone who has spoken against the petro dollar to survive, directly or indirectly. We have already seen the situation of Libya's leader Gaddafi and Iraq's leader Saddam, but they could not survive because there was no big power behind them. But since Iran is doing this now by using the Chinese currency, there is definitely going to be pressure on the dollar here.
This has come to light and this decision of Iran is enough good for its friendly countries. It will benefit China a lot and it will become an even strong country and it will have a very bad effect on America due to which America has threaten Iran that it will destroy Iran nuclear plant and in return Iran has also made such a threat and has also announce to target their big investment company. There is no doubt that Iran has been provide with a lot due to which it is not failing in this war till now. After these 5 day there will be another war and even then both of them will have different aspect and if America listen to Iran then only Iran will back down in this war otherwise Iran will not give up in this war till its last life. In this way Iran can reduce the power of America to a great extent in which it is seen to be successful.
However, we have been hearing this for decades that they want to challenge USD, but it seems nothing has transpired with BRICS so far. Still the world is dominated by the American dollar and it's hard to see it not continuing in the next coming years unless they really push hard and many countries switching to Yuan or Petrodollar or whatever new currency that we will have.
And with the escalating war, I don't know, it might just proved just strong the American Dollar is, in my opinion. Unless they losses in this war and it could mean that the American economy might be affected negatively. But so far no signs of slowing down on attacking Iran and it's military bases.