June 14, 2024 | Image source | In a significant global financial shift, Saudi Arabia decided not to renew their 50-year petrodollar agreement with the United States, which expired on June 9th. “Petrodollar” is a term that described the role of the U.S. dollar (USD) as the world’s reserve currency used for oil transactions on the world market. The petrodollar deal was established in the early 1970’s, when in exchange for U.S. military support and protection, Saudi Arabia agreed to sell their oil exports exclusively in U.S. dollars and invest their surplus oil revenues into U.S. Treasury bonds. The decision not to renew the contract enables Saudi Arabia to sell oil and other products in different currencies instead of exclusively in US dollars.
Another aspect of the shifting geopolitical landscape is Saudi Arabia’s partnership with BRICS (Brazil, Russia, India, China, and South Africa) nations and the development of a new BRICS currency.
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