U.S. Dollar Dominates Oil Trade
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•How Petrodollars Affect the US Dollar
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73% Informative
Petrodollars are dollars paid to oil-producing countries for their exports.
Oil exporters' reliance on the U.S. dollar reflected the dollar's already established role as the global reserve currency.
The USD stands at about 58% of the world's reserve currencies, down from more than 70% at the beginning of the century .
The rise of the petrodollar forced the U.S. to share political and economic power with the developing countries that supplied its energy.
Oil demand should decrease over time as the world moves toward cleaner, green, and renewable energy sources.
The politicization of dollarization, the American use of the powerful dollar to punish so-called "rogue" regimes, has led to a backlash.
As of 2023 , approximately 80% of the world's oil transactions are priced in U.S. dollars.
As a result, the dollar became the default currency for oil transactions.
A decline in the petrodollar system would have far-reaching consequences for the global financial order.
A shift away from dollar-denominated oil trades could reduce demand for USD.
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