CARLA NORRLÖF
Could changes to the longstanding “petrodollar” system undermine the greenback’s global dominance? For a half-century, the United States has sold advanced weaponry to Saudi Arabia, and the Kingdom has denominated its oil sales in dollars. But now that Saudi Arabia is openly considering pricing oil sales in other currencies, rumors are afoot that this arrangement could unravel.
The US-Saudi relationship began in 1933, one year after the Kingdom was formally established. The Saudi monarchy granted Standard Oil exclusive rights to explore the country’s Eastern Province, and this partnership led to the formation of ARAMCO (the Arabian American Oil Company) in 1938, followed by the discovery of vast reserves. In the subsequent years, oil would fuel the US-led victory in World War II, powering tanks, ships, and aircraft.
Although Saudi Arabia was officially neutral in the war, the US government had begun to characterize it as a crucial security interest by 1943. In 1945, US President Franklin D. Roosevelt met with Saudi King Abdulaziz Ibn Saud, and though their meeting was overshadowed by the Yalta Conference a few days earlier, it marked the beginning of an enduring strategic relationship between the two countries.
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