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The Iran war is accelerating the petrodollar’s decline
The renminbi, rouble and rupee are carving out a bigger share of a payments system that has long been dominated by the US dollar.
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Like the stricken Saudi Aramco Ras Tanura refinery complex (above), the petrodollar has suffered a blow from Iranian attacks as Tehran looks to other currencies in payment for its oil.
PHOTO: AFP
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For more than 50 years, a big part of the global financial order rested on a bargain struck in the desert. After the oil shock of 1973, when Arab producers quadrupled prices almost overnight, the Nixon administration set about constructing a new architecture. At its heart was a deal with Saudi Arabia, negotiated by the then US Secretary of State Henry Kissinger: The kingdom would price its oil in US dollars and recycle the proceeds into American Treasury bonds and other US assets. In return, America would provide military protection – bases, arms, security guarantees – for the Gulf monarchies.
