Deutsche Bank: The Petrodollar System Was Already Under Pressure Before the War Broke Out

Odaily News The petrodollar system is supported by three core elements: U.S. demand for oil, oil being priced in U.S. dollars, and the security relationship between the Gulf region and Washington. All three of these aspects are currently under pressure. First, the United States' new status as a net energy exporter means it is no longer strictly dependent on oil supplies from the Middle East. Second, the situation of oil being priced in U.S. dollars had already begun to deteriorate before the war broke out. Many countries have been working for years to price energy trade in their own currencies and have made some progress, albeit limited. The third point—and the most serious one—is that this war has cast uncertainty over the U.S. security umbrella policy and the Gulf region's trust in this policy. According to a report on the current state of the "petrodollar" system released by Deutsche Bank on Tuesday, strategist Malika Sachdeva believes that the petrodollar system was already under pressure before the war broke out: today, most Middle Eastern oil flows to Asia; sanctioned Russian and Iranian oil is traded in non-dollar currencies; and Saudi Arabia has not only been localizing its defense industry but also attempting to adopt non-dollar currencies for oil payments. (Jin10)