Melting US dollar

In 1973 the United States of America came to an agreement with Saudi Arabia to price and trade oil in US dollars. Any country to purchase Saudi oil would have to pay the price in USD, the deal was signed as America promised security and ammunition to Saudi Arabia, from where the birth of the Petro-Dollar came into existence and that strengthened the US dollar globally because Saudi Arabia is the largest oil producer in the Middle East and ranked second in the world after the USA. Recently Saudi Arabia and other OPEC+ countries have announced further oil output cuts of around 1.16 million barrels per day.

The pledges bring the total volume of cuts by OPEC+ to 3.66 million barrels per day according to Reuters calculations, which is equal to 3.7% of global demand. Oil prices jump 8% as the surprise announces OPEC+ countries of production cut. The US Administration threatened Saudi Arabia with the consequences of the OPEC cut and introduced the NOPEC bill which stands for No Oil Producing and Exporting Cartels. Via NOPEC US tried to quell Saudi Arabia and OPEC+ countries which hold most of their assets and bonds in American banks however the road was not that easy for the US, in response Saudi Arabia strictly replied against NOPEC and would ditch US currency for its oil sales and that’s not something the US would want and NOPEC bill is still on the table to be signed as an act.

The Super Power is losing its control over the autonomous countries, once acted upon like programmed robots. The US dollar is still the most powerful currency in the world, a lot of international trade is settled in the USD yet in the meantime the emerging power such as China and Russia are accelerating bilateral trades into their own currencies plus India is to be known for the quarter of world population pushing its trade in local currency to 18 different countries in the world, other nations and regions include Brazil, Argentina, South Africa, the Middle East, and Southeast Asia also accelerated efforts in recent time to move away from the dollar, choosing to use national or alternative currencies for the cross-border transaction and this process is expected to gain momentum. 0

Data from IMF’s Currency Composure of Official Foreign Exchange Reserves (COFER) verifies as at the end of 2022 more than 58% of global reserves are held in US dollars, which dropped by 12 percentage since the turn of the century from 71% in 1999. At the minute, the dominancy of USD in the world is melting from its solid form which was once backed by the Oil and Trade in the global market.