Brics vs. Petrodollar: Danger for the dollar - Saudis at the turning point!

Brics vs. Petrodollar: Danger for the dollar - Saudis at the turning point!

Recently, the Brics Alliance has taken up more intensive discussions that deal with the importance of the petrodollar and the influence of the United States on the global economy. Although such conversations last for more than a year, the alliance now seems to be closer than ever to challenge the western currency in the decisive area of oil trade.

Allianz relyed heavily on promoting local currencies last year. This step is particularly important for countries like China, whose Yuan has gained worldwide attention. Even if the influence on the US dollar has not yet penetrated completely, a decline in this dominance is foreseeable.

declining demand for the US dollar

The US dollar has been the dominant currency in oil trade since the 1970s. This made him an indispensable resource because countries needed large dollar reserves to cover their energy requirements. However, a global departure from this system would result in a falling demand for the US dollar

This decrease in demand could have fatal consequences, especially for the USA, since its national debt has already reached impressive heights of over 35.7 trillion. A loss of value of the currency would significantly increase the economic pressure on the United States, underline .

end of the petrodollar recycling

Another important aspect of petrodollar is so-called recycling, in which excess dollars from the oil trade are invested in US assets. This system has contributed significantly to the financing of the American budget and trade deficit. A weakening or end of these investments would put the US economy under additional pressure.

Even with current public debt, the United States is insufficiently prepared for such a scenario. Without the steady intake of dollars that is invested in investments, economic stability could be seriously threatened.

increase in US borrowing costs

The demand for US state bonds has so far contributed to ensuring low loan interest. But an end to the petrodollar system could destroy this advantage. The United States recently reduced its interest rates for the first time in four years to act against global inflation.

Without the support of the petrodollar, the bond interest could increase, which would restrict the financial freedom of action of the US government. At the same time, the BRICS countries could benefit from more favorable credit conditions, should replace their currency the dollar, loud watchcher.guru .

dwindling geopolitical power

After all, an end to the petrodollar system would also significantly reduce the geopolitical influence of the United States. So far, the dominance of the currency has made it possible for the United States to use it in international sanctions in order to exert political pressure. Moving from the US currency could, however, lead to a redesign of the global economic relationships.

The decline in petrodollar would force the United States to bend internationally stronger rules, since the relevance of the dollar would lose importance in a global context. Such a change would not only result in economic, but also geopolitical consequences, watcher.guru explained .