Saudi Arabia gave America the biggest blow in 50 years

Petrodollar Deal: Saudi Arabia is getting closer to China and Russia! Now America's dominance in the Saudi market is decreasing. Saudi Arabia is expanding its trade area and strengthening its relations with Russia, China and Japan. In this episode, the Saudi government has taken a big step and given another blow to America. Saudi Arabia has refused to extend its 50-year-old petro-dollar deal with America, which is ending on June 9.

This move is being seen as an encouragement to use other currencies instead of the US dollar for trade around the world. Its impact can be seen directly on America. This agreement was a big example of America's economic dominance around the world, but there is no sign of a repeat of this agreement.

What is Petro Dollar Deal?

The petro-dollar deal came into existence after the US moved away from the gold standard for trade. The US entered into a petrodollar deal with Saudi Arabia in the 1970s after the oil crisis that followed the Israeli war. Under this deal, Saudi Arabia would sell its gold across the world for dollars.

In return for this deal, America gave its security guarantee to Saudi Arabia and America got many benefits from this. Firstly, they got Saudi oil. Secondly, their currency reserves started increasing in the world. Insiders say that this deal was a win-win condition for America, i.e. a win from all sides.

How will the oil be sold after the deal is over?

Saudi Arabia is the largest exporter of crude oil in the world and sells its oil to many countries. Saudi Arabia will now sell oil in many currencies including Chinese RMB, Euro, Yen, Rupee and Yuan instead of US Dollar.

Growing closeness with China-Russia

Under Crown Prince Mohammed bin Salman, Saudi Arabia has moved closer to China and Russia. This change has come after differences in security from the US to the Middle East. For example, Yemen's Houthis were removed from the terrorist list after Biden became president. Recently, there has been a rift between the Saudi regime and the US over America's role in the Gaza war.