Headline RoundupJune 17th, 2024

Did Saudi Arabia End its 'Petrodollar' Agreement With the US?

Summary from the AllSides News Team

After reports that a secret 50-year-long “petrodollar” agreement between Saudi Arabia and the U.S. failed, some warned of the U.S. dollar's global demise. What actually happened?

Contradictions: Some said the agreement required Saudi Arabia to keep oil priced in dollars. But others said that wasn't the nature of the deal.

For Context: In 1974, the countries reportedly struck a then-secret agreement to swap U.S. aid for Saudi Arabia's investment of petrodollars in U.S. Treasurys. There's been an "implicit" agreement to keep oil priced in dollars since the 1970's, but nothing official, MarketWatch (Center bias) told AllSides. Oil is typically priced in dollars worldwide, though Saudi Arabia has recently signaled openness to accepting other currencies.

Donovan's Narrative: Paul Donovan, chief economist at UBS Global Wealth Management, explained the agreement while noting that oil "has always traded in non-dollar currencies," and that contrary reports were born from "confirmation bias" in the crypto world, where many "desperately want to believe in the dollar’s demise." Donovan said Saudi Arabia has "indicated it was happy to negotiate oil sales in other currencies." MarketWatch told AllSides that "practically all of the Saudis oil revenues are priced in dollars."

How The Media Covered It: Outlets like Straight Arrow News (Center bias) and Newsmax (Lean Right bias) reported that the "agreement" to keep oil priced in dollars fell through, though they were contradicted by MarketWatch and ZeroHedge (Lean Right bias), who focused on Donovan's claim that the story was "fake news."

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