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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In a first, Bengaluru woman loses Rs 2 lakh after pressing ‘1’ on fake IVR call: Report
Bengaluru: In what appears to be the first such cybercrime reported in Bengaluru, a 57-year-old woman reportedly lost Rs 2 lakh after following instructions and pressing a key during a fake IVR (Interactive Voice Response) call from a nationalised bank.
The woman, a resident of Dattatreyanagar in Hosakerehalli, received a call that appeared to be from the State Bank of India (SBI), a bank she holds an account with. The IVR message claimed that Rs 2 lakh was being transferred from her account and instructed her to press '1' if she did not authorize the transaction, as reported by the Times of India on Thursday.
"I was shocked on hearing the voice note as I had not done any such transaction. I didn't press any number. The voice note repeated, saying that I have not responded. I was confused. After three rounds of such announcements, I pressed 1 as I had not initiated the transaction. Soon after that, there was a second announcement stating, ‘Please visit your bank and contact the manager immediately.' Subsequently, the call got disconnected," she told the national daily.
Shortly after, the call disconnected, and she discovered a Rs 2 lakh loss in her account. She immediately contacted her bank and filed a complaint with the police.
Meanwhile, a senior police officer explained that fraudsters often use IVR calls to ask for personal details like the last four digits of a debit card, bank account number, date of birth, email ID, or other information needed to access online banking. "Once the victim shares the information, the money is siphoned off. Without sharing the credentials, it is not possible to siphon off money just by pressing the options 3 or 1 or 9," he told TOI.
The officer noted that the victim may have shared some information in response to the voice message, which could have allowed the fraudsters to access her account and steal the money. If she didn't provide any details, this type of scam would be new to them, and the investigation will provide more clarity.
A case has been registered under the Information Technology Act and BNS section 318 (cheating).
