Myers Digest: Saudi Arabia has dumped the PetroDollar; the deal expired on June 9

(1) Saudi Arabia has dumped the PetroDollar; the deal expired on June 9, 2024
(2) End of the Petrodollar threatens American Hegemony
(3) Saudis selling oil for other currencies will weaken the Empire
(4) Saudi Arabia’s petro-dollar exit: A global finance paradigm shift
(5) Saudi Arabia Just Ditched The U.S. Dollar
(6) Saudi Foreign Minister: “Israel Doesn’t Get To Decide” on Palestinian Statehood
(7) Saudi Foreign Minister says no iplomatic ties with Israel unless Palestinian issue is resolved first

Might the Lobby’s capture of the US Congress and Presidents have any connection to Saudis dumping the PetroDollar? Of course; only a fool would think otherwise. The Gazxa war makes it all so clear – Peter M.

(1) Saudi Arabia has dumped the PetroDollar; the deal expired on June 9, 2024

U.S.-Saudi Petrodollar Pact Ends after 50 Years

Story by Paul Hoffman
© Provided by TipRanks

The 50-year-old petrodollar agreement between the U.S. and Saudi Arabia was just allowed to expire. 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.

A Boon to U.S. Bonds
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.

Status as the Reserve Currency

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.

In his recent book, Bonfire of the Sanities (December 2023), bestselling author and investment manager David Wright argues the strength of the dollar is a key factor behind America’s high standard of living. Wright declares that the reason why people in the U.S. enjoy “as high of a standard of living as we do is because the dollar is strong.” Wright then explains this strength is partly because of faith in our economy “and because energy can’t be bought without U.S. dollars.”

Potential to Disrupt the Global Financial Order

However, the petrodollar’s dominance may be facing its most significant challenge yet. The agreement between the U.S. and Saudi Arabia expired on June 9, 2024. This expiration has far-reaching implications, as it has the potential to disrupt the global financial order.

The shifting power dynamics in the oil market are a critical factor in this development. The rise of alternative energy sources, such as renewables and natural gas, has reduced the world’s reliance on oil. Furthermore, the emergence of new oil-producing nations, such as Brazil and Canada, has challenged the traditional dominance of the Middle East.

U.S. Dollar’s Future

The petrodollar’s expiration could weaken the U.S. dollar and, by extension, the U.S. 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. This, in turn, could result in higher inflation, higher interest rates, and a weaker bond market in the United States.

Key Takeaway – A Significant Shift in Global Power Dynamics

The expiration of the petrodollar agreement represents a significant shift in global power dynamics. It highlights the growing influence of emerging economies and the changing energy landscape. While the full implications of this shift remain to be seen, investors should at least be aware that on a macro level, the global financial order is entering a new era. The U.S. dollar’s dominance is no longer guaranteed.

(2) End of the Petrodollar threatens American Hegemony

The End of the Petrodollar

The End of the Petrodollar

In January 2023, Alex Macris wrote a book entitled <>RUNNING ON EMPTY: How the Imminent Collapse of the Petrodollar System sets the Stage for World War III.

America’s global hegemony is based on the petrodollar system and the Russo-Ukraine war is rapidly bringing that system to an end. The end of the petrodollar will be the end of the world order as we have known it since 1945. Though the U.S. petrodollar system is perhaps the most important economic structure in the world, it is almost never discussed in mainstream sources.

In RUNNING ON EMPTY, author Alexander Macris traces the circumstances by which the petrodollar system came into being; the disastrous effect that the system had on US domestic and foreign affairs, ranging from deindustrialization to foreign wars to widening gaps between the 1% and the rest of us. With that background in place, the book explains the geostrategy of the major powers on Earth today, how those strategies lead inexorably to the Russo-Ukraine War, and how that war will usher in the end of the petrodollar system.

Yesterday, it was reported that Saudi Arabia is not renewing the 50-year petrodollar agreement with the US that expires on June 9, 2024.

What this means is that BRICSIA is increasing the economic pressure on the United States, by further reducing its ability to find buyers for its debt and thereby shift the effects of its debt-generated inflation to the rest of the world. Business Insider describes <>what it anticipates will result:

A movement away from the dollar—even in slow motion—will mean a rising cost of living for Americans. With fewer foreigners holding on to dollars, the US regime’s current runaway monetary inflation will create more domestic price inflation. In other words, movement away from the dollar will mean the US regime must engage in less monetization of the nation’s debt if it wishes to avoid runaway inflation. It also likely will lead to a need to pay higher interest rates on US government bonds, and that will mean a need for more taxpayer money to service the debt. It will mean that it will become more difficult for the US regime to finance every new war, program, and pet project that Washington can think up.

Posted on <>June 5, 2024 by <>VD
Tagged <>decline and fall, <>economics

(3) Saudis selling oil for other currencies will weaken the Empire

The U.S. Is Facing A Major Challenge As Petrodollar Loses Force

By <> ZeroHedge – Feb 02, 2023, 10:00 AM CST

By Ryan McMaken, The Mises Institute via

The increasingly frequent Saudi comments about trading in nondollar currencies open the door for oil trade in Yuan, Euro or Yen.

It is especially foolhardy to ignore the status of the petrodollar because that status also has geopolitical implications.

This shift in strategic interests for Saudi Arabia potentially poses an immediate threat to US strategic interests.

On January 17, the Saudi minister of finance, Mohammed Al-Jadaan, announced that the Saudi state is open to selling oil in currencies other than the dollar. “There are no issues with discussing how we settle our trade arrangements, whether it is in the US dollar, whether it is the euro, whether it is the Saudi riyal,” Al-Jadaan <>told Bloomberg TV.

If the Saudi regime does indeed embrace substantial trade in currencies other than the dollar as part of its oil-export business, this would signal a shift away from the dollar as the dominant currency in global oil payments. Or measured another way, this would signal the end of the so-called petrodollar.

But how large of a shift is this? With the increasingly frequent Saudi comments about trading in nondollar currencies, we’ve also seen an increasing number of pundits announcing the “<>collapse” of the dollar or the imminent <>implosion of the dollar’s currently outsized global power.

Will a shift away from the dollar in the global oil trade really lead to a big relative decline in the dollar? Probably and eventually. But a number of other dominoes would need to fall first, most especially the domino we call “Eurodollars.”

On the other hand, it would be foolish to simply dismiss the potential end of the Saudi preference for the dollar with hand-waving. The end of the petrodollar would indeed weaken the dollar, even if this would not be a mortal blow in itself. Moreover, it is especially foolhardy to ignore the status of the petrodollar because that status also has geopolitical implications. Saudi comments on the dollar signal that the Saudis no longer consider its alliance with the United States to be as important as it has been since the 1970s. What’s not an immediate economic problem for the US regime or the dollar may nonetheless be an immediate geopolitical problem. …

What Is the Petrodollar?

The petrodollar is the result of US efforts to secure access to Middle Eastern oil while also lessening the slide of the dollar in the early 1970s.

By 1974, the US dollar was in a precarious position. In 1971, thanks to profligate spending on both war and domestic welfare programs, the United States could no longer maintain a set global price for gold in line with the Bretton Woods system established in 1944. The value of the dollar in relation to gold fell as the supply of dollars increased as a byproduct of growing deficit spending. Foreign governments and investors began to lose faith in the dollar.

In response to these developments, Richard Nixon announced that the US would abandon the Bretton Woods system. The dollar began to float against other currencies. Not surprisingly, this devaluation did not restore confidence in the dollar. Moreover, the US had made no effort to rein in deficit spending. So the US needed to continue to find ways to sell government debt without driving up interest rates. That is, the US needed more buyers for its debt. Motivation for a fix grew even more after 1973, when the first oil shock further exacerbated the deficit-fueled price inflation Americans were enduring.

But by 1974, the enormous flood of dollars from the US into Saudi Arabia, the top oil exporter, suggested a solution. Nixon secured an agreement in which the US would buy oil from Saudi Arabia and provide the kingdom military aid and equipment as well. In return, the Saudis would use their dollars to purchase US Treasurys and help finance US budget deficits.

From a public finance point of view, this appeared to be a win-win. The Saudis would receive protection from geopolitical enemies, and the US would get a new place to unload large amounts of government debt. Moreover, the Saudis could park their dollars in relatively safe and reliable investments in the United States. This became known as “petrodollar recycling.” By spending on oil, the US was creating new demand for US debt and US dollars.

As time went on, thanks to Saudi Arabia’s dominance in the Organization of the Petroleum Exporting Countries (OPEC), the dollar’s dominance was extended to OPEC overall, which meant that the dollar became the preferred currency for oil purchases worldwide.

This petrodollar arrangement proved to be especially important in the 1970s and 1980s, when Saudi Arabia and the OPEC countries controlled more of the oil trade than they do now. It also closely tied US interests to Saudi interests, ensuring US enmity toward the kingdom’s traditional rivals, such as Iran. […]

A movement away from the dollar—even in slow motion—will mean a rising cost of living for Americans. With fewer foreigners holding on to dollars, the US regime’s current runaway monetary inflation will create more domestic price inflation. …

The Geopolitics of the Petrodollar

The more obvious short-term effects of the move away from the petrodollar will be in geopolitics rather than in the currency order. In addition to signaling that it is no longer wedded to the dollar, Saudi Arabia has also recently announced its openness toward Russia and a willingness to join the Brazil, Russia, India, China, and South Africa (BRICS) nations. <>This shift in strategic interests for Saudi Arabia potentially poses an immediate threat to US strategic interests, in that the US regime has become accustomed to dominating the entire Persian Gulf region through the US’s Saudi ties. A Saudi turn away from the petrodollar will magnify this shift. That will be enough to further threaten the American standard of living, but not enough in itself to end the dollar. After all, the pound sterling did not cease to exist after its own fall from its vaunted position as the preferred global reserve currency. But it did become far less powerful. The dollar is headed in the same direction.

(4) Saudi Arabia’s petro-dollar exit: A global finance paradigm shift

By Katja Hamilton

10 Jun 2024

The lapsed security agreement – signed by the United States and Saudi Arabia on 8 June 1974 – establishes two joint commissions, one on economic co-operation and the other on Saudi Arabia’s military needs, and was said to have heralded an era of increasingly close co-operation between the two countries.

American officials at the time expressed optimism that the deal would motivate Saudi Arabia to ramp up its oil production. They also envisioned it as a blueprint for fostering economic collaboration between Washington and other Arab countries.

The crucial decision to not renew the contract enables Saudi Arabia to sell oil and other goods in multiple currencies, including the Chinese RMB, Euros, Yen, and Yuan, instead of exclusively in US dollars. Additionally, the potential use of digital currencies like Bitcoin may also be considered.

This latest development signifies a major shift away from the petrodollar system established in 1972, when the US decoupled its currency from gold, and is anticipated to hasten the global shift away from the US dollar.

Cross-border CBDC transactions

In a more recent move, Saudi Arabia has announced its involvement in Project mBridge, a project which explores a multi-central bank digital currency (CBDC) platform shared among participating central banks and commercial banks. It is built on distributed ledger technology (DLT) to enable instant cross-border payments settlements, and foreign-exchange transactions. …

(5) Saudi Arabia Just Ditched The U.S. Dollar


JUN 11, 2024

Andrei Jikh explains the significant shift in global economics with the expiration of the long-standing Petro dollar agreement between Saudi Arabia and the US on June 9, 2024.

This system, in place for 75 years, marked the US dollar as the world’s reserve currency, granting economic stability and access to rising asset prices. The arrangement between the US and Saudi Arabia helped preserve the US dollar’s dominance over global trade.

However, this past Sunday, the Saudi Arabian prince announced that he would not renew the contract, signaling a major change in the global financial landscape. This agreement, initiated after World War II, allowed the US to control the world’s energy, and its impact on the standard of living for Americans is substantial. The Petro dollar system replaced gold as the standard of value and enabled the US to maintain dominance over international trade. The reasons behind Saudi Arabia’s decision not to renew the contract are part of a larger story, and its implications for us and future generations are yet to be fully understood.

Andrei discusses the trend of countries moving away from using the US dollar in international trade and oil transactions, with Saudi Arabia being the latest reported addition. The speaker argues that this could signal the end of America’s global financial dominance and raises the question of what the US is famous for exporting that the world is buying. The answer, according to the speaker, is US dollars. The speaker explains that the US economy benefits greatly from being able to export dollars and issuing debt in the form of treasury bonds, which creates a stable economy, lower interest rates, and financial market liquidity.

He discusses the potential consequences of Saudi Arabia’s decision to no longer use the US dollar for oil transactions. He explains that higher interest rates resulting from this decision could lead to more expensive mortgages, rents, auto loans, student loans, and credit cards. It could also put a strain on the banking system, national deficit, and federal budget, potentially leading to higher taxes. Additionally, the value of the dollar itself could be affected, making traveling and buying goods from other countries more expensive.

Andrei also touches on the reasons behind Saudi Arabia’s decision, including its commitment to the BRICS alliance and the trend of countries reducing their dependence on the dollar. He argues that the US has limited options to fight this trend, and that the world’s holdings of foreign exchange reserves in dollars and the dollar’s use in foreign exchange transactions remain high. The speaker concludes by sharing their personal thoughts on the situation and offering investment advice.

(6) Saudi Foreign Minister: “Israel Doesn’t Get To Decide” on Palestinian Statehood

Saudi Foreign Minister: “Israel Doesn’t Get To Decide” on Palestinian Statehood

Wednesday, May 29, 2024

by Karen Faulkner, Worthy News Correspondent

(<>Worthy News) – Saudi Foreign Minister Prince Faisal bin Farhan has expressed “extreme concern” over the Israeli government’s rejection of a two-state solution to the Palestinian conflict, adding that Israel “doesn’t get to decide” whether the Palestinians can have a state or not, World Israel News (WIN) reports.

Prince Faisal made his remarks at a press conference in Brussels after Norway’s foreign minister presented Palestinian Authority Premier Mohammad Mustafa with diplomatic papers confirming his country’s recognition of a Palestinian state. Norway joined fellow European nations Ireland and Spain in unilaterally recognizing a Palestinian state.

Addressing reporters, Prince Faisal said Norway’s recognition would “reinvigorate the two-state solution independent of Israel’s position because Israel doesn’t get to decide whether or not the Palestinians have a right to self-determination.”

“I firmly believe that a two-state solution with the establishment of a credible Palestinian state serves … the interest of the Palestinians and delivers [on] their right to self-determination,” Prince Faisal said.

“It is also in the interest of Israel and delivers the security that Israel needs and deserves,” Faisal added, referring to Jerusalem’s current rejection of a two-state solution. “The fact that the current government in Israel doesn’t realize that, of course, is a matter of extreme concern.”

(7) Saudi Foreign Minister says no iplomatic ties with Israel unless Palestinian issue is resolved first

Saudi Foreign Minister says no Israel ties until path to a Palestinian state

‘Credible, irreversible’ process needed to create Palestinian state, Prince Faisal bin Farhan says

Saudi Arabia Foreign Minister Prince Faisal bin Farhan attends a session during the World Economic Forum in Davos last week. AFP

Saudi Arabia will not establish diplomatic ties with Israel unless the Palestinian issue is resolved first, the kingdom’s Foreign Minister Prince Faisal bin Farhan said in an interview broadcast on Sunday.

“In order for the region to see true peace, to see true stability and to see real integration that delivers economic and social benefits for all of us, including Israel, is through peace, through a credible, irreversible process to a Palestine state,” Prince Faisal told CNN.

“We are fully ready. Not just Saudi Arabia, but as Arab countries, to engage in that conversation. I would hope that the Israelis would be as well, but it’s up to them to make that decision.”

When asked to clarify if there could be no normal ties without a path to a credible and irreversible Palestinian state, Prince Faisal said: “That’s the only way we’re going to get a benefit. So, yes.”

The interview, recorded at last week’s World Economic Forum held in <>Davos, comes as the civilian death toll in Gaza continues to soar.

The Health Ministry in Gaza said on Sunday that more than <>25,000 Palestinians have been killed and more than 62,000 wounded in Israel’s assault since the October 7 Hamas attack on Israel.

Israel’s air and ground offensive has also destroyed large areas of the small coastal enclave, and displaced most of its 2.3 million population.

“What we are seeing is the Israelis are crushing Gaza, the civilian population of Gaza,” Prince Faisal said. “This is completely unnecessary, completely unacceptable and has to stop.”

Saudi Foreign Minister <>@FaisalbinFarhan tells me <>@wef <>@Davos that Saudi Arabia will only normalize ties w/ Israel if there’s a credible, irreversible path to a Palestinian state

Watch the full interview on GPS, @ 10am & 1pm ET Sunday on <>@CNN <>

— Fareed Zakaria (@FareedZakaria) <>January 20, 2024

Asked if Saudi Arabia would be willing to finance post-war reconstruction in Gaza, Prince Faisal said this depended on the prospects for lasting peace.

“As long as we’re able to find a pathway to a solution, a resolution, a pathway that means that we’re not going to be here again in a year or two, then we can talk about anything,” he said.

“But if we are just resetting to the status quo before October 7, in a way that sets us up for another round of this, as we have seen in the past, we’re not interested in that conversation.”

The Palestinians seek a state that would include Gaza, the Israeli-occupied West Bank and annexed East Jerusalem, territories Israel captured in the 1967 Middle East war.

Israel views all of Jerusalem as its capital and the West Bank as the historical and biblical heartland of the Jewish people. It has built scores of settlements across both territories that are home to hundreds of thousands of Jewish settlers. The last of several rounds of peace talks broke down nearly 15 years ago.

Updated: January 25, 2024, 5:41 PM