https://www.wsj.com/finance/currencies/the-dominant-dollar-f...
80% of oil trade in 2023 in dollars. Mostly importantly, the gulf states do in exchange for US security guarantees, which Trump just blew up in spectacular fashion. Decades of Middle Eastern policy have just been undone because of the US half-committing to this war.
Compare oil trading as a fraction of dollar volumes in the 1970s, when petrodollar was a thing, to today. Also, the JPMorgan Chase estimate is almost certainly too high for dollar volumes in oil trading–I sat on a desk in Connecticut almost two decades ago and we traded oil settled for in sterling.
> gulf states do in exchange for US security guarantees
This is still 1970s geopolitics. The Gulf states get U.S. security guarantees in exchange for basing, foreign policy suzerainty, et cetera. We don't need Gulf money to finance our deficit anymore. (See: your article re. the UAE.)
Petrodollar is a fun thing to talk about. But it hasn't had explanatory or policy value since the Cold War. American consumption and capital markets drive global dollar demand. The petrodollar, if it has any use, is as a Big Mac index for general dollar use. It's a signal, not a driver.
(not a "petro pound" though!)
I think the main importance of the "Petroyuan" is simply sanctions evasion. The US claims jurisdiction over all dollar transactions, so countries need to use something else.
Correct. And I'm not saying tracking in what currency different commodities are settled isn't important. But it's as a signal of financial and trade flows. Not an end in itself. It was an end in itself in the 1970s, with the petrodollar and–far-more important to America–petrodollar recycling.
Dollar hegemony is built on American consumption, first, and capital markets, second. The power of the renmimbi rests in Beijing's production power.
I don't follow this at all? Is there some implication that selling oil to China is constraining sovereignty? Is there some nuclear deal between Iran and China I'm not aware of?
As an autocratic regime, they (IRGC) have no choice but to pursue not only sovereignty but domestic control.
> Petrodollar hypothesis hasn't been a thing for decades
Yeah, this has always seemed overstated. However it circulates in exactly the kind of rightwing paranoia circles which strongly influence the current US government.
China helping Iran rebuild means China getting more say in Tehran than they have right now. And to date, nuclear non-proliferation has been a serious issue for Beijing. I can't see China being thrilled about a new nuclear power one country away.
> it circulates in exactly the kind of rightwing paranoia circles which strongly influence the current US government
When did it make the jump from the far left to the far right?
Yes on feet. No on nuclear. Iran's economy, for the near term, is trashed. It's going to need to choose between sovereighty and wealth. If it chooses the formewr, it lacks the resources to complete the project. If it chooses the latter, it probably goes with China, which means its nuclear programme will be constrained.
> force the end of the PetroDollar in the process
Sigh. Petrodollar hypothesis hasn't been a thing for decades. Various countries price and settle oil in currencies other than dollars. Dollar demand due to oil is a vanishing fraction of total international dollar demand. Like, oil could swap to being entirely traded in Bitcoin and it might make the next Fed meeting's agenda.