Petrodollar - Why US wants it strong.

The petrodollar system began in the early 1970s after the United States abandoned the gold standard and struck a deal with Saudi Arabia to price oil exclusively in U.S. dollars. In exchange for military protection and other benefits, Saudi Arabia agreed to sell oil only in dollars, and major oil producers recycled excess petrodollars into U.S. Treasury securities and financial markets. This arrangement created sustained global demand for the dollar, reinforcing its role as the world’s primary reserve currency and enabling the U.S. to run long-term deficits with relatively low borrowing costs.

It leaves huge effects like ,

🫰Dollar Dominance, Because oil , the world’s most traded commodity , was priced in dollars, virtually every oil importing nation needed large dollar reserves. This entrenched the dollar’s central role in international trade and finance.

🫰Global Capital Flows ,Surplus petrodollars were recycled back into U.S. Treasuries and assets, helping to keep U.S. interest rates relatively low and fueling investment in the American economy.

🫰Geopolitical Power , The arrangement bolstered U.S. influence over oil producers and global financial systems, linking foreign policy closely to energy markets and financial stability.

🫰Maintaining a strong petrodollar remains a strategic priority for U.S. policymakers because it underpins international demand for the dollar which supports global liquidity, keeps borrowing costs manageable, and sustains America’s economic and geopolitical leverage.

Is the Petrodollar System Weakening?
Recent global trends suggest a gradual erosion of the traditional petrodollar arrangement. Several factors are contributing to this shift,

De-dollarization Moves , Countries such as China, Russia, Iran, and others have taken steps to trade energy and settle transactions in currencies other than the dollar, including the yuan and euro.

Multipolar Financial System, The rise of alternative financial infrastructure and BRICS nations promoting non dollar settlement systems signals a long-term challenge to dollar exclusivity.

Energy Transition , Growing renewable energy adoption reduces global dependence on crude oil over time, cutting demand for dollar denominated oil transactions.

Even though the petrodollar isn’t collapsing overnight, its grip is loosening. Many analysts point out that oil trade in non dollar currencies is increasing, which could gradually diminish structural demand for U.S. dollars over decades.

Notably, recent U.S. military and geopolitical actions including interventions in Iraq, Libya, and most recently Venezuela have reignited debate about whether strategic interests in oil and monetary dominance still intertwine. Because of we look closely all major actions surrounded by petroleum reserves. Some analysts argue such actions reflect a determination to hold onto petrodollar influence, even at the risk of global backlash.

Silver surge, reflection to petrodollar.

Yes and that has shown up in market prices. In 2025, gold and silver entered historic rallies. Gold experienced one of its strongest years on record, climbing sharply amid geopolitical tensions and expectations of U.S. interest rate cuts.

Silver dramatically outpaced gold, surging roughly 140–147% in 2025, becoming one of the top-performing assets globally over the year.

While some narratives link silver’s surge directly to petrodollar weakness, the relationship is indirect. Silver prices tend to benefit from broad monetary uncertainty, inflation fears, and a weaker dollar , conditions that accompany a weakening petrodollar. But silver’s industrial fundamentals and structural supply constraints are equally significant drivers.According to recent estimates, the countries with the largest silver reserves are Peru ,Australia , Russia, China and Poland .

These nations hold sizable quantities of silver in the ground, and many of them are key producers, with Mexico often topping production lists even if not the very highest in total reserves.

Conclusion:
Financial systems cannot be separated from global power dynamics and shifts in one inevitably shape the other. In times of geopolitical and monetary stress, investors turn to hard assets like gold and silver. In the pressure of alternatives , US will keep hunting anything which threatening petrodollar system even it is a company, ruler or regime.

Thank you so much for your valuable time till here. You may not agreed to my thoughts , let's comment your opinion. Like, upvote and leave comment for feedback.

Note: The article also published on my read.cash Wall.

Cheers,

Amjad