If the US dollar were to lose its status as the primary currency for international oil transactions, it would likely have significant economic and geopolitical implications for the United States and the entire global economy.
First, the demand for US dollars would decrease as countries would no longer need to hold dollars in order to purchase oil. This is no small amount of dollars it’s huge numbers. This would likely lead to a decline in the value of the US dollar relative to other currencies, which could lead to higher inflation and higher borrowing costs for the United States. Supply and demand here, less demand with equal supply will create a glut in the market and reduce the value. Less demand will require higher interest rates on us loans/treasuries to get investment.
Second, the US would lose some of its geopolitical influence, as the petrodollar system has been a key component of US foreign policy for decades. Without the petrodollar system, the US would have less leverage over countries that are heavily reliant on oil exports, which could lead to a shift in the balance of power in international relations. If you’re the originator of the currency and all transactions must be made in your currency, you get to make the rules. Change that dynamic and your no longer everyone’s boss…
Third, the global oil market would likely become more complex and more fragmented, as different countries and regions would start to use different currencies for oil transactions. This could lead to increased volatility and uncertainty in the oil market, which could have ripple effects throughout the global economy.
Overall, the loss of the petrodollar system would be a major shift in the global economic and geopolitical landscape, and it would likely take time to fully understand the long-term implications of such a shift. This change would become a turning point for the US and its era of unrivaled supremacy.