The beginning of the end for petrodollar? It could be, says Deutsche

The economic fallout of the Iran war could mark the beginning of the end for petrodollar dominance, according to one Deutsche strategist. The U.S. dollar retains its status as the world’s reserve currency as most oil is priced and invoiced in the greenback. But the Iran conflict could see that dominance eroded if countries decide to price crude in other currencies, Deutsche FX strategist Mallika Sachdeva wrote in a research note published Tuesday. Crucially, she wrote that the war could be remembered as a key catalyst for “erosion in petrodollar dominance, and the beginnings of the petroyuan”. While many of the factors influencing the hegemony of the petrodollar were in place before the conflict, the aftermath could have several implications for the greenback – namely, a breakdown in the “security-for-oil-pricing” arrangement that has been upheld for over 50 years. The original terms agreed by the U.S. and Saudi Arabia in 1974 ensured the Gulf state would price its oil exports in dollars and invest oil surpluses into Treasurys, in return for security guarantees and military protection. But the U.S. security umbrella has been tested, with Gulf economies facing attacks on US bases, oil fields and infrastructure. Deutsche sees this as a catalyst for a potential unwind in Gulf dollar savings. Sachdeva also flagged the possibility of reduced demand for non-renewable energy in the future as countries ramp-up investment in renewables. “A world that becomes more self-sufficient in defence and energy would also be a world that holds less USD reserves,” she said. What is the alternative? Deutsche cited media reports that Iran is negotiating with other countries to allow ships through the Strait of Hormuz if oil payments are paid in yuan. While this move is largely speculative at present, the strategic importance of the Middle East to the dollar’s role as the world’s reserve currency should not be underestimated, according to Deutsche. “The current conflict may be the perfect storm for the petrodollar,” Sachdeva added.

SleepLean – Improve Sleep & Support Healthy Weight

Source link

👉 Visit the Official SleepLean Website

Discover more from stock updates now

Subscribe to get the latest posts sent to your email.

Check SleepLean Official Website

Trending News

Money

Indian market

Category Collection

The Biggest Risk to Your Artificial Intelligence (AI) Stocks Isn’t AI Itself. It’s $100+ Oil.

TAC Infosec Limited

India’s iron ore imports set to hit 7-year high in 2025–2026

DC Defenders Kicker Matt McCrane Makes 1st 4-Point Field Goal In UFL History

Trump warns US could ‘take the oil in Iran’ as Mideast war escalates

Can Intel’s Core Ultra Series 3 Launch Propel Its Shares?

The beginning of the end for petrodollar? It could be, says Deutsche

Like this:

Related

Discover more from stock updates now

Leave a ReplyCancel reply

Trending News

Category Collection

Share this:

Like this:

Related

Discover more from stock updates now

Leave a ReplyCancel reply

Related News