Saudi Arabia Terminates 50-Year Agreement, Ends Sales Of Oil In U.S Dollars
Saudi Arabia’s 80-year petrodollar deal with the United States has been cancelled.
Reports said Saudi Arabia decided to cancel the deal which expired on Sunday, June 9.
According to the report, the agreement was originally signed on June 8, 1974, and was a key part of US global economic influence and power.
The deal set up joint commissions for economic cooperation and Saudi Arabia’s military needs. Back then, American officials hoped it would encourage Saudi Arabia to produce more oil and strengthen economic ties with Arab countries.
What the non-renewal of the deal means is that Saudi Arabia can now sell oil and other goods using different currencies, such as the Chinese RMB, Euros, Yen, and Yuan, instead of only US dollars.
The report said there’s also talk of exploring digital currencies like Bitcoin for transactions.
This decision marks a significant move away from the petrodollar system established in 1972 when the US stopped linking its currency directly to gold.
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It’s expected to accelerate the global trend of using currencies other than the US dollar in international trade.
Additionally, Saudi Arabia has joined Project mBridge, a collaborative effort exploring a digital currency platform shared among central banks and commercial banks.
This project aims to facilitate instant cross-border payments and foreign exchange transactions using distributed ledger technology.
Project mBridge began in 2021 and involves several prominent central banks and institutions worldwide. It recently reached the stage of Minimum Viable Product (MVP), inviting private-sector firms to propose innovations and use cases to further develop the platform.
This move by Saudi Arabia marks the beginning of a major shift in global economic dynamics, though its full implications on international trade and finance remain to be seen.
Kazeem Badmus is a graduate of Mass Communication with years of experience. A professional in journalism and media writing, Kazeem prioritses accuracy and factual reportage of issues. He is also a dexterous finder of the truth with conscious delivery of unbiased and development oriented stories.
