Since the oil-dollar contract has not been renegotiated, will Saudi Arabia continue to accept the US dollar for oil trade?
The term “oil-dollar” is often used in financial discussions, especially now that the 50-year agreement with Saudi Arabia has ended. After the contract ended, the country can accept local currency for oil trade.
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Many economists believe that terminating the agreement does not necessarily mean that Saudi Arabia will no longer use the US dollar.
Paul Donovan, Chief Economist at UBS Global Wealth Management, commented on speculation about the decline of the US dollar after the agreement ended:
This story seems to have started in the world of cryptocurrency. Many cryptocurrency speculators are eager to believe that the US dollar will disappear.
He also explained that the local currency in Saudi Arabia, the Riyal, is still pegged to the US dollar. Additionally, Saudi Arabia’s financial assets are mainly in US dollars.
He believes that the reserve status of the US dollar depends on how currencies are stored, rather than the currency used for transactions.
