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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Intend to allow feeding of pigeons for 2 hours in morning at Dadar Kabutarkhana: BMC to HC
Mumbai, Aug 13 (PTI): The city civic body on Wednesday told the Bombay High Court it intends to allow controlled feeding of pigeons for two hours each morning at the Dadar Kabutarkhana subject to conditions.
A bench of Justices G S Kulkarni and Arif Doctor, however, stated that before granting any such permission, the Brihanmumbai Municipal Corporation (BMC) has to first issue a public notice inviting objections and then take a decision on allowing controlled feeding of the birds at the popular site in Dadar.
Since the BMC's decision to close kabutarkhanas (pigeon feeding spots) in the city and prohibit feeding of pigeons was in larger interest of public health, the sanctity of the same has to be maintained, the court noted, while hearing a bunch of petitions.
Last week, tarpaulin sheets were placed at the Dadar Kabutarkhana, a popular pigeon feeding site, by the BMC to prevent people from offering grains to the birds, a move which had led to protest during which the covers were forcibly removed by agitators.
Pursuant to this, a few individuals submitted an application to the BMC seeking interim arrangements for controlled feeding of the pigeons.
On Wednesday, BMC counsel Ram Apte told the court the civic body intends to permit controlled feeding of the birds from 6 am to 8 am subject to certain conditions.
The bench then questioned if the civic body had first invited objections to the application (seeking nod for controlled pigeon feeding) before taking its decision.
"You (BMC) cannot just allow feeding now once you have already taken a closure decision keeping public health in mind. You will have to take a well considered decision," the HC observed.
Once an application is received, you need to issue a notice and invite objections from people and then take a decision. Once you have taken a decision keeping people's health in mind then you need to maintain that sanctity, the bench affirmed.
The Maharashtra government on Wednesday also submitted a list of 11 names to be part of a committee that would carry out a scientific study on the issue of pigeon feeding at public places and its impact on human health.
The court said the government shall notify the committee by August 20.
Advocate General Birendra Saraf, appearing for the state government, said the committee would comprise officials from state public health and town planning departments and medical experts.
The court was hearing a bunch of petitions filed by people who regularly feed pigeons at kabutarkhanas. The petitioners have challenged the civic body's decision to ban such feedings and close down kabutarkhanas in the metropolis over potential health hazards from the exercise.
The high court had last month refused to grant any interim relief to the petitioners, but had asked the civic authorities not to demolish any heritage kabutarkhanas. The court had also said the BMC could take action as per law against those feeding pigeons at public places.
The Supreme Court had earlier this week refused to intervene in the HC order.
Senior counsel Anil Sakhare, appearing for the petitioners who have sought permission to offer grains to pigeons at the Dadar Kabutarkhana, said once the BMC takes a decision permitting controlled feeding, then they would move the HC seeking modification of the earlier order refusing interim relief.
