Saudi Arabia moves away from unofficial petrodollar ‘deal’ and opens up to other currencies
Although the country did not have exclusive business with the United States, it is striking that it is turning its attention to deals with other countries. For example, it joined mBridge, a digital currency platform that includes the central banks of China and Thailand.
(Pexels)
Saudi Arabia backs away from the unofficial petrodollar “deal” with the United States. “Petrodollar” is a term used to describe the role of the U.S. dollar (USD) as the currency used for crude oil transactions in the global market.
"It traces back to the early 1970s when the United States and Saudi Arabia struck a deal shortly after the U.S. went off the gold standard – and the agreement has had far-reaching consequences for the global economy," explained finance site Kitco.
NewsMax explained that with this decision, Saudi Arabia will be allowed to sell oil and other goods in many other currencies and not exclusively in U.S. dollars.
"Saudi Arabia’s shift to other currencies is expected to hasten the global movement away from the dollar ... The 1974 security agreement that the U.S. and Saudi Arabia signed heralded close cooperation between the two countries by establishing two joint commissions, one on economic cooperation and the second on Saudi Arabia’s military needs," NewsMax indicated.
No official agreement
Meanwhile, media outlets such as Ledger Insights explained that despite the existence of this unofficial agreement, Saudi Arabia was not obliged to use dollars for oil sales. What is clear is that Saudi Arabia is beginning to look to other business horizons.
For example, it joined mBridge, a multi-central bank digital currency platform developed to support real-time cross-border peer-to-peer payments and currency transactions via CBDC.
This platform includes the central banks of China, Thailand and the United Arab Emirates. mBridge does not plan to accept dollar payments at this stage.
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