In the early 1970s in the forming of OPEC, Jimmy Carter championed Saudi Arabia as the head of OPEC in exchange for oil to be priced, bought and sold in US Dollars and on the understanding that Saudi Arabia would buy US Treasury Bonds to assist the stability of the US economy.
This meant that all countries who wanted to buy oil had to stockpile US currency or they couldn’t purchase it, which helped the US impose sanctions at will around the globe with countries deemed not to be friendly by refusing them US dollars, without which they couldn’t purchase oil on the international markets.
The Chinese however have done a nice deal recently with the Saudis whereby they have the Shanghai Oil Market where small amounts of oil can be purchased via the old Gold standard. Putin has managed to buy oil this way at an inflated price. The Chinese, Saudis and Russians are happy as everyone wins and America loses.
At the same time the US State Department concluded its findings into the World Trade Centre attacks and concluded that figures inside Saudi were responsible, which the Saudis didn’t take too kindly to, threatening the US that they would dump the US Treasury Bills onto the market, which would effectively make the US bankrupt.
Funnily enough the official report now merely states an un-named Arab State as being behind 9/11. So we have a situation where the US economy is being threatened by the Saudis and at the same time the Saudis, Russia and China are all challenging the US stranglehold on the oil markets and the ability to impose sanctions. Interesting times ahead indeed.
The Democrats were willing to take out Gadaffi and Assad and also antagonise Putin in order to safeguard US strength abroad via the enforced continued use of the Petrodollar. Only time will tell what Trump’s reaction will be to this threat to the US economy and world-standing.
Disclaimer: The thoughts expressed in this article are those of the author, and not necessarily of MBGA News.