Per a report, the biggest oil exporter in the world, Saudi Arabia, might take a hit to the U.S. dollar (USD) supremacy for the benefit of Bitcoin and other global currencies. During the World Economic Forum (WEF) in Davos, the country’s minister of finance, Mohammed Al-Jadaan, hinted at the possibility of accepting non-dollar currencies to trade oil.
Since the 1970s, Saudi Arabia has agreed to price its oil in the U.S. dollar, giving this currency and its country an advantage over the world. This system is known as the “Petrodollar,” and it’s part of the machinery that supports the dollar’s global reserve currency status.
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Al-Jadaan claims Saudi Arabia is open to revisiting this agreement as it strengthens its ties with the world’s largest oil importer and U.S. rival, China. During the WEF, the government official stated the following, opening a Pandora’s Box that can affect the market for years to come:
There are no issues with discussing how we settle our trade arrangements, whether it is in the US dollar, whether it is the euro, whether it is the Saudi riyal. I don’t think we are waving away or ruling out any discussion that will help improve the trade around the world.
According to the report, China is moving in to speed up a shift in the U.S. dollar global currency status. The Asian giant is offering its partners access to the Shanghai Petroleum and Natural Gas Exchange, a platform that operates with the Chinese Yuan.
In 2022, the Petrodollar system was questioned by Arthur Hayes, founder of the crypto exchange BitMEX. Per a report from our sister website, NewsBTC, Hayes believes this system was jeopardized by the sanctions imposed by the International Community on Russia. The BitMEX Founder said in 2022:
Now add in the news that Saudi Arabia is considering accepting Yuan instead of Dollars for Chinese oil and you have an accelerator for more economic problems and market uncertainty.
In addition, the Petrodollar system is jeopardized by China and its allies trying to gain trade influence and break the multidecade system. In this new scenario, countries will seek a neutral currency, such as Gold and Bitcoin, as the dollar losses strength. Hayes:
A new neutral reserve asset, which I believe will be gold, will be used to facilitate global trade in energy and foodstuffs. From a philosophical standpoint, central banks and sovereigns appreciate the value of gold, but not that of Bitcoin (…). Bitcoin is less than two decades old. But don’t worry: as gold succeeds so will Bitcoin.