When Saudi Arabia accepts yuan in payment for its oil the petrodollar standard will be over. From Nick Giaumbruno at internationalman.com:
As Doug Casey has correctly noted, the prime directive of any organism—whether it’s an amoeba or a person or a corporation or a government—is to survive.
That’s why the US government protects the petrodollar so zealously. It needs the system to survive.
World leaders who have challenged the petrodollar recently have ended up dead…
Why Everyone Uses the US Dollar… for Now
In the 1970s, the US government struck a series of deals with Saudi Arabia, creating the petrodollar system. The US promised to coddle and protect the Saudi kingdom. And, in exchange, Saudi Arabia would use its dominant position in OPEC to ensure that all oil transactions happened in US dollars.
Until recently, virtually anyone who wanted to import oil from any country needed US dollars to pay for it.
The dollar is just a middleman here. But countries and businesses use it in countless transactions amounting to trillions of dollars that have nothing to do with US products or services.
Plus, if foreign countries are already using dollars for oil, it’s just easier to use the dollar for other international trade. That’s why, in addition to oil sales, the US dollar is used for about 80% of all international transactions.
Take Saddam Hussein and Muammar Gaddafi, for example. Each led a large oil-producing country—Iraq and Libya, respectively. And both tried to sell their oil for something other than US dollars, before US military interventions led to their deaths.
In October 2000, Saddam had started to sell Iraqi oil for euros only. Iraq said it would no longer accept dollars for oil because it did not want to deal “in the currency of the enemy.”
A little over two years later, the US invaded. Immediately after Baghdad fell to US forces, all Iraqi oil sales were switched back to dollars.
To continue reading: The Cardinal Sin of International Finance