Saudi Arabia to Stop Using US Dollar for Oil Sales
Saudi Arabia has announced that it will no longer use the US dollar for its oil sales, marking a significant shift in global economic dynamics.
Giorgio Torre, Advisor to GCC Governments, disclosed on Thursday that Saudi Arabia will not renew its 50-year petrodollar agreement with the United States.
Torre suggested that the country is exploring alternatives such as cryptocurrencies and Central Bank Digital Currency (CBDC), a digital form of currency issued by a country’s central bank.
As a major oil producer, Saudi Arabia holds about 17 percent of the world’s proven petroleum reserves, with 267 billion barrels of proven oil reserves and 9.5 cubic meters of proven natural gas reserves. According to the Organisation of Petroleum Exporting Countries (OPEC), the country’s crude oil production averaged 9 million barrels per day in May, as reported in their June Oil Market Report.
“Saudi Arabia will stop using the US dollar for oil sales and will not renew the 50-year petrodollar agreement with the US. This means that oil transactions from the main oil producer globally will not be executed with USD,” said Torre on LinkedIn.
This move is part of a broader trend towards the de-dollarization of the global economy, a campaign led by the BRICS nations. Originally comprising Brazil, Russia, India, China, and South Africa, BRICS expanded in January to include Saudi Arabia, Iran, the United Arab Emirates (UAE), Egypt, Ethiopia, and Argentina.
Dr. Julien Campos, an engineer, commented on the implications of Saudi Arabia’s decision. “I recently listened to Charles Gave, who argued that if a country were to buy oil using its own currency instead of dollars, it would remove a significant constraint on its development. Energy is a fundamental driver of economic growth, and abandoning the US dollar in such transactions could rapidly accelerate a country’s progress by eliminating the need to maintain dollar reserves, which are beyond its direct control,” Campos explained.
Hugo Garin, an entrepreneur, believes that Saudi Arabia’s move will have a substantial impact and may prompt other countries to follow suit. “Big impact. Now we can expect Saudi Arabia to make the SAR more sovereign and depeg it from the USD. Why not adopt a CBDC like an e-SAR, modeled as a structured currency, allowing for much better flexibility in their policies? Hopefully, other GCC countries will follow. Maybe this is what Qatar has in mind with their projected CBDC? Let’s see,” Garin speculated.
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Harry Behrens, the first Head of the Daimler Mobility Blockchain Factory, emphasized the broader geopolitical implications. “This is not only real, but they are also joining mBridge: an inter-CBDC system developed by the Bank for International Settlements (BIS) with Chinese blockchain technology and for major BRICS players. This is a check and rebalancing against the increasing politicization and militarization of the international dollar-based financial system. You cannot sanction half the world and expect everybody to continue using your systems and currency,” Behrens stated.
Saudi Arabia’s decision to stop using the US dollar for oil sales marks a pivotal moment in the evolving landscape of global finance and geopolitics.
