Japanese media: The "oil for dollars" system is quietly collapsing in the Gulf states

As reported by Asahi Shimbun's With News on June 11 (excerpt): "The system requiring oil to be purchased in dollars is quietly crumbling among Gulf nations."

The article states: The "Gulf Six" refers to the six countries of the Gulf Cooperation Council (GCC)—Saudi Arabia, the United Arab Emirates (UAE), Oman, Kuwait, Qatar, and Bahrain—whose purpose is to coordinate economic and defense policies. These nations are referred to as the "Six Gulf Brothers" in the report.

Global crude oil transactions have largely been conducted exclusively in U.S. dollars. This began in 1974 when U.S. Secretary of State Henry Kissinger reached a secret agreement with Saudi Arabia. This established the "petrodollar system": "Crude oil can only be sold in dollars. In exchange, the U.S. guarantees Saudi Arabia’s security."

Due to this system, countries worldwide need dollars, maintaining their value even amid massive trade deficits, allowing the U.S. economy to continue functioning.

To purchase crude oil, Japan must first acquire dollars.

However, this system is now beginning to weaken. Saudi Arabia and Iran have started conducting partial crude oil transactions using China’s renminbi (RMB).

For Saudi Arabia, China is its largest trading partner. Trade volume with China is three to four times greater than with the United States. Moreover, Saudi Arabia imports goods such as smartphones and automobiles from China. Using RMB for oil transactions makes more sense.

The fact that the U.S. failed to adequately protect Gulf states during the Iran conflict has undermined the foundation of the petrodollar system. "You made many promises but didn’t deliver. Then I see no obligation to support the dollar." This sentiment is spreading among oil-producing nations.

China is gradually filling this void. Chinese enterprises are building oil pipelines, enabling crude exports to bypass the Strait of Hormuz.

The genuine voice from Gulf nations is: "The people of the Middle East will never forget those who helped us in times of difficulty."

Original source: toutiao.com/article/1867657608400908/

Disclaimer: The views expressed in this article are solely those of the author.