In the 1970s the Arabs attacked Israel because they didn't want the U.S. building a new nation in their midst. We had the oil crisis. The first option of the U.S. was to send in the military, take out the Arab leaders, and install new ones. That would be been costly and probably impossible.
Then smart people (ah, the U.S. had some back in the day) decided the U.S. could control the ME if all oil was sold in US dollars. The petrodollar was born. The deal was brilliant. The ME rulers sell in dollars and the US keeps them in power. They're all monarchies (as the Shah was) so have no real public support.
They slowly started working with Israel because, in a sense, Israel is also reliant on the U.S.
Iran (and Venezuela) does not sell oil in petrodollars — obviously. That weakens the U.S. monopoly. The sanctions would be lifted tomorrow if Iran sold oil ONLY in petrodollars but then there'd be no reason for Israel. Israel has had to make other reasons over the years. Iran will become a nuclear terrorist state, etc. That's a rabbit hole we've already been down.
Remember, the deal with all Arab countries is the U.S. protects them, not so much from each other these days, but their own people.
Iran is not attacking the Gulf Coast Countries (GCCs) because of Gaza. Gaza has nothing to do with any of this. That's WHY everyone stands by while Gaza is slowly exterminated.
Iran is attacking the GCCs to send two messages 1.) The U.S. cannot protect you; and 2) You will suffer what we will suffer but you can end it by kicking the U.S. out — go off petrodollar.
If the U.S. can't protect the GCCs, which I don't believe it can, they will ALL start selling oil directly to China, etc. Why buy electronics with deficit backed dollars when you can get a better deal direct? The whole Middle East will go off the dollar. That doesn't mean they won't sell oil in dollars, just that they won't have to.
You might be thinking, so what? What difference does it really make what currency is used?
You might think that because you've NEVER lived in a country with a weak currency. Most people around the world are gob smacked we could play this so badly.
The definition of a strong currency is one that can buy the most important imports for a country. Oil and gas are the MOST important resources bar none. There is no nation that is rich without them. ENERGY IS EVERYTHING (forget renewables, not significant).
The genius of the U.S. setting up the petrodollar system (which it did without going to war directly!) is that it guarantees everyone needs dollars. Whatever country you are, if you want energy, you MUST get dollars somehow to buy the oil. That means you need a bank account with dollars. That means you'll have to store your dollars in US Treasury bonds.
You can liken the oil market to a casino that the U.S. controls. Only US chips (dollars) allowed. Use other chips…SANCTIONS!!!
Without petrodollars the value of the dollar is what other countries buy our goods for. What goods do we sell globally? What goods are made in the U.S. that the world can't get anywhere else? The world has changed drastically in 30 years.
I'm sure all those Congressmen were explained the petrodollar system and why Iran (and China) want to break our monopoly and why we need to go to war to prevent that.
My belief is 1) we could keep the petrodollar the same way we created it in the first place, shrewd negotiation and diplomacy. We can't force it on anyone. Never could. It has the OPPOSITE effect, makes them not trust us and this system doesn't work without trust.
None of those smart people are running the government. So Congress has just rubberstamped a plan that won't work, that isn't working. We are now on a FAST TRACK to losing the petrodollar and after that the U.S. dollar as reserve currency.
This won't happen tomorrow. Tariffs are an accelerant here. So is Trump's stupid petty fights with Canada, Europe, and Ukraine.
Iran (and China and the BRICS) is slowly, and methodically, exploiting every weakness the U.S. has. From its weakened military, divided population, greed, avarice, fiscal profligacy, etc.
Canada has already begun direct oil trade with China for EVs. We FORCED them into this. Was never their choice. Trump makes blunder after blunder (and like Israel with Netanyahu) we keep him in charge.
Anyway, our Congress represents us. We have the government we deserve.
My prediction is in the months ahead you WILL hear more than you ever want to know about the petrodollar. Or about how China is trying to kill us with a currency war, etc. Some of it with be right. Much of it distorted propaganda bs.
We will learn too late. It's already too late.
Anyway, it's over. I never expected to see it blow up so soon. If you had asked me a couple of years ago if I thought the US dollar would lose its reserve current status anytime soon I would have said no way.
Now. Yes way. We had one shot to get out of this, Congress.
Today, that path closed and I see no way to play the hand Trump has delt us. It's a losing hand. The losing-est hand I can imagine. Trump has done what so many predicted. Set most citizens of the U.S. on the path to bankruptcy.
No one will notice tomorrow. You will for sure notice when you retire.