Saudi Arabia canceled the 50-year agreement with the United States | USA | Saudi Arabia | News.

 

Own Reporter: Saudi Arabia has canceled the long 50-year petrodollar agreement with America. This agreement mainly regulates the economy and military power of the two countries.

On June 8, 1974, the Petrodollar Agreement was signed between the United States and Saudi Arabia. His term ends on June 9. Saudi Arabia is not interested in renewing the agreement.

The non-renewal of the petrodollar agreement is feared to have an impact on global trade and the economy. Many say the agreement was instrumental in establishing the dominance of the American dollar in the world. If it is not renewed, America may stumble.

What is the Petrodollar deal?

Petrodollar is not a currency. The American dollar used for exporting petroleum or mineral oil is called petrodollar. The United States introduced the petrodollar after abandoning the gold exchange policy for trade.

In the early 1970s, America suffered a bit of a shock to the world economy. All of a sudden, the dollar started to fall. At that time there was a petroleum crisis across America.

In 1973 Arab countries, led mainly by Egypt and Syria, went to war with Israel. America stood by Israel during the Yom Kippur War.

The West Asian oil producing countries sided with Israel and imposed several restrictions on the United States in the trade of mineral oil. This puts further pressure on their mineral oil reserves.

To get rid of this crisis, Washington made a petrodollar deal with Saudi Arabia. According to the terms of the agreement, the United States will buy oil from Saudi Arabia. Instead, the US will provide military aid to Saudi Arabia.

Saudi military support from the US has reduced the threat of an Israeli attack. The condition of the agreement was that Saudi Arabia will not sell mineral oil only to the US, but to any other country in dollars.

The agreement also stipulates that Saudi Arabia must repatriate revenues collected from the petrodollar to the United States. Through this, on the one hand, as Saudi got military security, America got economic security.

Since the petrodollar contract has not been reinstated, Saudi Arabia can now sell oil not only in dollars, but also in other countries' currencies. China's Yuan, Europe's Euro, Russia's Ruble, Japan's Yen - Saudi Arabia is no longer a barrier to transactions.

From now on, Saudi Arabia will be able to digitally trade mineral oil, not just a specific country's currency, but also Bitcoin. There is also such a thought.

Many people think that America is going to have some problems as a result of Saudi's decision. Because, it will reduce the dollar transaction in international trade.

America still controls world trade. The key is the dollar. The US dollar is used for most transactions around the world. As the currency becomes more important, so will America's importance.

But if Saudi Arabia does not renew the agreement, one by one smaller countries will try to withdraw from the currency. This may cause a new crisis in the American economy in the coming days. In that case, Joe Biden's country could be in trouble.

Experts say the US needs to change its international policy to restore the dollar to its glory. We must try to reduce China's hegemony. Because China has become one of America's main rivals.

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