Fact-Check: Reports of Saudi Arabia ending Petrodollar Deal is misleading
Washington D.C. — Recent reports suggesting Saudi Arabia's termination of a longstanding petrodollar deal with the United States have ignited widespread online discussions regarding the potential decline of the US dollar as the world's reserve currency. However, several experts have pointed out a fundamental flaw in these reports: there was never a formal petrodollar agreement to begin with.
Paul Donovan, chief economist at UBS Global Wealth Management, addressed the issue in a blog post, highlighting that the narrative had gained unwarranted traction, serving as a clear example of "confirmation bias." He noted, "The story seems to have started in the crypto world. Many crypto speculators desperately want to believe in the dollar’s demise."
The reports suggested that an agreement, allegedly signed between Saudi Arabia and the US in 1974, expired on June 9, 2024, without renewal. This so-called 'petrodollar deal' was purportedly crucial for maintaining the dollar's global dominance. Donovan clarified that while the US and Saudi Arabia did establish a Joint Commission for economic cooperation in June 1974 to help Saudi Arabia spend its sudden influx of oil dollars on US products, this was not a formal petrodollar agreement. In July of that year, Saudi Arabia agreed to invest oil revenues in US Treasuries, a move that was confidential until 2016.
Furthermore, Donovan explained that oil has historically been traded in various currencies, not exclusively the dollar. "In January 2023, Saudi indicated it was happy to negotiate oil sales in other currencies. The possibility changes little for financial markets. Saudi Arabia’s riyal remains pegged to the dollar, and its stock of financial assets are dollar-focused. The dollar’s reserve status depends on how money is stored, not how transactions are denominated," Donovan stated.
The US-Saudi relationship remains robust, with Riyadh continuing to be a key ally in the Middle East. This alliance is particularly significant for the purchase of US arms, which are priced in dollars. Despite China's substantial dollar reserves compared to Saudi Arabia's, efforts to diminish the dollar's global reserve currency status have seen minimal success.
The dominance of the dollar in global oil trade, encompassing transactions, transport, and insurance, is unlikely to wane even if Saudi Arabia were to consider selling oil in yuan. This preference for dollars simplifies transactions, unlike India's experience of buying Russian oil in local currency, where surplus accumulation poses investment or lending challenges for Moscow.
While Riyadh might explore using oil payments for Chinese exports, this is feasible with dollars as well. The oil industry's reliance on the dollar as the primary trade medium is expected to remain unchallenged, maintaining the dollar's predominant role in global financial markets.
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Hyderabad woman commits suicide after allegedly getting injected with HIV-infected blood by relative
Hyderabad: A 22-year-old woman committed suicide in Hyderabad about a month after a relative allegedly injected her with HIV-infected blood after she rejected a marriage proposal, police said.
The woman is identified as Ramani. She was found dead at her grandmother's home in Annojiguda on Friday morning, according to The News Minute.
According to police, the accused, a 24-year-old man related to the victim, had been in a relationship with her. Initially their families had agreed to their marriage but the proposal was later withdrawn after medical tests confirmed that the man was HIV positive.
According to investigators, the accused allegedly injected his own blood into the woman at her home on March 11, after his marriage proposal was refused. Police said he obtained a syringe and committed the act when she was alone, allegedly with the intent of forcing her into marriage.
The incident was discovered when the woman told her relatives and was sent to a medical checkup. The accused was detained in March and put in judicial prison on allegations including attempted murder.
Police said a suicide note was recovered from the scene in which the woman mentioned being distressed by the manner in which the incident was discussed on social media. Family members stated that she had been undergoing emotional distress and had developed health complications following the assault.
