Doha, Qatar: Saudi Arabia has decided not to renew its 50-year old petro-dollar deal with United States, a decision that it expected to cause upheaval in the financial world.
Several media reports cited that the deal, which was a major milestone for US global economic dominance, expired on June 9, with no official confirmation on its renewal.
The deal signed on June 8, 1974, was a result of bilateral agreement between the two nations, as a result of which the price and trade oil was conducted exclusively in US dollars.
???????? ???????? Saudi Arabia's 50-year-old petrodollar agreement with the United States has expired, with no new agreement in place.
— BRICS News (@BRICSinfo) June 12, 2024
Saudi Arabia will now sell oil in multiple currencies, including the Chinese RMB, Euros, Yen, and Yuan, instead of exclusively in US dollars. pic.twitter.com/MxdUn8t2ZP
With the expiration of this agreement, it is expected that Saudi will sell oil in multiple currencies, including Euros, Yen and Yuan. Media reports also cited that the country is exploring digital currencies for transactions. Saudi Arabia's decision to join Project mBridge, a effort to develop a digital currency platform shared among central banks points towards new potentials.
A decline in demand for the US dollar could lead to higher inflation, interest rates, and a weaker bond market in the US.
Saudi Arabia's move marks the beginning of a major shift in global economy, though its full impact remains to be seen.
