https://sputnikglobe.com/20240615/end-of-us-saudi-petrodollar-pact-signals-declining-us-global-trade-role---ex-imf-official-1118972169.html
End of US-Saudi Petrodollar Pact Signals Declining US Global Trade Role - Ex-IMF Official
End of US-Saudi Petrodollar Pact Signals Declining US Global Trade Role - Ex-IMF Official
Sputnik International
The recent lapse of the US-Saudi petrodollar agreement signals the United States' international role in trade is declining but no major shift is expected in the global power dynamic any time soon, Hossein Askari, former IMF Executive Board member and special adviser to the Saudi Arabian finance minister, told Sputnik.
2024-06-15T08:58+0000
2024-06-15T08:58+0000
2024-06-15T08:58+0000
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"No, not for now unless it leads to a big shift in the currency denomination of international trade," Askari said when asked if the lapse will lead to a shift in global power dynamics. "It is more a messaging that America’s international role in trade is beginning to decline." Saudi Arabia decided to let a 50-year petrodollar agreement with the United States expire on June 9. The agreement was created after the 1973 oil crisis and required that Saudi Arabia would price its oil exports exclusively in US dollars and invest its surplus oil revenues in US Treasury bonds. Saudi Arabia can now sell oil and other goods using other currencies like the renminbi, euro and yen, among others. Askari said the global oil market will not experience any major shake-ups following the end of the US-Saudi petrodollar agreement. "I don’t see Saudi Arabia running to denominate in another currency for financial reasons," Askari said. "If they change the currency of denomination it would be more politically motivated." Askari pointed out that although the dollar is more stable than other currencies, denominating oil in a basket of currencies such as the IMF’s Special Drawing Rights, would make the price of oil even more stable. Askari also said he does not expect the lapsed agreement to have much of an impact on the role of the dollar in the global financial system. Askari also pointed out that the importance of oil is declining with the rise of liquefied natural gas, renewable energy and electric vehicles replacing gasoline powered cars.
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End of US-Saudi Petrodollar Pact Signals Declining US Global Trade Role - Ex-IMF Official
WASHINGTON (Sputnik) - The recent lapse of the US-Saudi petrodollar agreement signals the United States' international role in trade is declining but no major shift is expected in the global power dynamic any time soon, Hossein Askari, former IMF Executive Board member and special adviser to the Saudi Arabian finance minister, told Sputnik.
"No, not for now unless it leads to a big shift in the currency denomination of international trade," Askari said when asked if the lapse will lead to a shift in global power dynamics. "It is more a messaging that America’s international role in trade is beginning to decline."
Saudi Arabia decided to let a 50-year petrodollar agreement with the United States expire on June 9. The agreement was created after the 1973 oil crisis and required that Saudi Arabia would price its oil exports exclusively in US dollars and invest its surplus oil revenues in US Treasury bonds.
Saudi Arabia can now sell oil and other goods using other currencies like the renminbi, euro and yen, among others.
Askari said the global oil market will not experience any major shake-ups following the end of the US-Saudi petrodollar agreement.
"I don’t see Saudi Arabia running to denominate in another currency for financial reasons," Askari said. "If they change the currency of denomination it would be more politically motivated."
Askari pointed out that
although the dollar is more stable than other currencies, denominating oil in a basket of currencies such as the IMF’s Special Drawing Rights, would make the price of oil even more stable.
Askari also said he does not expect the lapsed agreement to have much of an impact on the role of the dollar in the global financial system.
"While the pact has expired, there is no rush to denominate in other currencies," Askari said.
Askari also pointed out that the importance of oil is declining with the rise of liquefied natural gas, renewable energy and electric vehicles replacing gasoline powered cars.
