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The Truth About What Is Happening To The Petrodollar

• The Economic Collapse Blog - Michale Snyder

When other sources were reporting on "the death of the petrodollar", I was asked why I was not writing about it.  Well, the truth is that I was not writing about it because the petrodollar is not dead.  It is certainly in trouble, but it is not dead.  Today, most oil continues to be sold in U.S. dollars, and most global trade continues to be conducted in U.S. dollars.  But that could change as other countries lose faith in our currency.  In particular, we will want to carefully watch what the BRICS nations choose to do.  45 percent of the world's inhabitants live in the BRICS nations, and they have been implementing strategies that are designed to promote their own currencies and reduce dependence on the U.S. dollar.  As U.S. relations with leading BRICS nations continue to deteriorate, I would expect that trend to accelerate.

So I am not optimistic about the future of the petrodollar at all.

But what some other sources reported about the petrodollar earlier this month was simply not accurate.

Let me start at the beginning.  According to Investopedia, petrodollars are "simply U.S. dollars accepted as payment by an oil exporter"…

Petrodollars are oil export revenues denominated in U.S. dollars. Petrodollars are not a distinct currency; they are simply U.S. dollars accepted as payment by an oil exporter.

Global crude oil exports averaged approximately 88.4 million barrels per day in 2020. That pace would generate annual global petrodollar supply of more than $3.2 trillion a year, assuming an average price of $100 per barrel.