That system, set up since the 1970’s, has been responsible in large part for the US dollar’s relative strength over the last several decades, and thus also supporting Americans’ standard of living.
However, if Iranian forces do indeed run out over the Middle East and turn off the oil spigot, it can only mean the death of the Petrodollar for two reasons: (1) there would be no oil to sell to other nations neither in dollars or any currency, and (2) there would be no US military to defend Saudi Arabia and the Gulf states against an Iranian invasion and occupation.
One unanswered question seems to have been, will the Petrodollar be brought down entirely by the Second Signpost, or will it be weakened such that the Second Signpost is merely the last step in its death?
Back in 2014 when I wrote Daniel Revisited it seemed to be the former. However, the answer is revealing itself to very well be the latter.
This news item out of Saudi Arabia is a rather significant development in terms of the Petrodollar’s days being numbered. Chinese President Xi was welcomed in Saudi Arabia with pomp and circumstance, as trade deals were made with Saudi oil being bought in Chinese Yuan, and relations between the Arab oil-rich states and China drew closer.
This isn’t so surprising since the way the United States has treated those Arab states in the last two years has cooled the friendships with those nations.