Demise of the Petrodollar
If you're not quite sure what the Petrodollar is, it's pretty uncomplicated. Back in the 1970's, at the height of the oil crisis, United States President Richard Nixon conceived an economic master plan. He offered to help defend Saudi Arabia from their burgeoning Middle East rivals. In exchange for that promise, the Saudi kingdom assured all of its oil production be traded in USD( energyandcapital.com). This strategic stroke of genius helped cement the US dollar as the foremost reserve currency in the world. And while this isn't the lone reason nations hold onto and trade in American money, it may very well be the most pertinent. More recently, though, the agreement that created the Petrodollar has become increasingly strained. The Saudi and US alliance is no longer as close as it was under previous administrations. Political and diplomatic differences on issues ranging from human rights and the ongoing catastrophe in Yemen has caused the once tight relationship