Very little news coverage on this financial paradigm shift. Doesn’t mean it’s not accurate or true. Might just mean that the powers that shouldn’t be- The US led NATO, bankers and big global corporations don’t want this known by a larger audience.
Here are some interesting links to read and consider:
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
Originally signed on 8 June 1974, the deal established two joint commissions, one based on economic cooperation and the other on Saudi Arabia’s military needs. At the time, it was said that it heralded an era of close cooperation between the two countries, says Katja Hamilton of BizCommunity.
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.
Another interesting read this one from Bloomberg
The Gulf is flexing petrodollar power and learning its limits
This article is about all the Gulf nations, Saudi Arabia included.
So they’re building up portfolios that have made them major forces on the global investment scene, with holdings that include American tech companies, English football clubs, Egyptian real estate, African mines and Turkish bank deposits. Four of the world’s top 10 sovereign wealth funds are from the region, those belonging to Kuwait, Qatar, Saudi Arabia and the UAE. The Gulf is close to becoming the only region with three separate wealth funds exceeding $1 trillion each. Asset managers, private equity partners and venture capitalists from New York, Silicon Valley and London pack the business-class cabins of Emirates and Etihad Airways A380s to pitch their services and ideas.
Money isn’t just an economic tool; it’s also a political weapon. The Gulf nations are using their petrodollar wealth to wield influence on the world stage—placing investments to further strategic goals. Turning hydrocarbons into geopolitical muscle isn’t new: The oil embargo in 1973, when Arab states stopped selling oil to countries supporting Israel, leading to a fourfold increase in the price of crude, is only the most famous example.
The Gulf nations’ decisions ripple around the globe. Their investments can affect the cost of borrowing for the US, their key security partner. Their cash can provide an alternative to China’s financing in an increasingly polarized world. And their aid and other support can help stabilize troubled economies and make or break International Monetary Fund bailouts.
In short, the Gulf nations are playing a multipronged game—diversifying their investments while also securing their access to resources. But the payments they receive from oil and gas are too large to be replaced with dividends from sovereign wealth funds, even with their massive size, no matter the investment strategy.
One wonders if Saudi Arabia needs to be tied to the US dollar any longer. Do the other Gulf nations need to be? As global economics diversify, are the Gulf nations looking to diversify away from US dollar dominance?
2 replies on “Saudi Arabia’s petro-dollar and a Global financial paradigm shift??”
Just going from the assumption I have that they have a background in trading, Them as a people. They might be seeing the writing on the wall of the U.S.A and starting to diversify so if something were to happen to the U.S.A they have different assets to work it.
Just my speculation.
It’s good speculation kaz- I’ve got another piece on the subject saved to read, but after I do it’ll be here