Saudi Arabia has decided not to renew its 80-year-old deal with the United States involving petrodollars. The deal expired on June 9, according to reports.
The country is embracing a trend of shifting from the US dollar to multiple currencies, impacting US global economic dominance.
Saudi Arabia will no longer be required to pay in dollars, as other countries are also beginning to standardize their currencies.
Additionally, Saudi Arabia is involved in Project mBridge, which focuses on creating a digital currency platform shared among central banks and commercial banks.
Initiated in 2021, Project mBridge has reached the Minimum Viable Product (MVP) stage and is seeking private sector innovation to further develop the platform.
The petrodollar system originated from a bilateral agreement between the US and Saudi Arabia in 1974.
The United States agreed to provide military support and security assurances to Saudi Arabia, ensuring the kingdom’s stability and protection from external threats.
In return, Saudi Arabia committed to investing a significant portion of its oil revenues into US assets, particularly US Treasury securities.
This arrangement helped finance the US government’s budget deficits and stabilize the value of the US dollar in global currency markets.
“We consider this a milestone in our relations with Saudi Arabia and with the Arab countries in general,” said Henry Kissinger at the time of the deal.
