- How the Developments in Saudi Arabia May Foretell Collapse of Petrodollar
Saudi Arabia’s crown prince Mohammed bin Salman has vowed to return his country to “moderate Islam”; the pledge was followed by the dismissal and detainment of many of the country’s high-profile princes and businessmen. Turkish energy analyst Dr Volkan Ozdemir commented that it is not about politics but rather about economics and petrodollars.
In his interview with Sputnik Turkiye, Volkan Ozdemir, the Chairman of Ankara-based EPPEN (Institute for Energy Markets and Policies), said that Riyadh is possibly cleaning out the opponents to the oil trade in US dollars and the changes the country is currently living through could be viewed as part of the US’ attempt to fight against a strengthening China.
His comments refer to the latest developments in Saudi Arabia, with numerous dismissals and reshuffling of the country’s government. Dr Ozdemir recalled that Saudi Arabia remains the world leader in oil exports – producing about 10 million barrels per day and exporting about 7 million barrels daily.
“For the last 44-45 years, the petrodollar system has been ruling the world, which means that the international oil trade had been mostly paid for in US dollars. It stems from the Middle Eastern crises of the 1970s, when Saudi Arabia bound itself to selling oil only in US dollars. Given that Saudi oil has played the major role in the US dollar becoming the world’s reserve currency, the US turned into the guarantor of the security of Saudi Arabia. Being the world’s reserve currency, the US dollar has remained the foundation of the US’ global hegemony,” the expert explained.