> Orrrrr.... because its value is backed by the world's largest economy?
There's also the fact that oil is quoted in US dollars, and about 65 countries, about a third of all the countries in the world, peg their currency to the US dollar[1].
As a former trader, this claim cracks me up. It makes the times I quoted crude contracts in euros and loonies and yen seem so subversive…
The truth is, until recently, dollars were easy to transfer. The Fed started moving money electronically in 1915; by 1918, a national wire system was established [1]. Between the USSR and U.S., only one embraced free movement of capital. As a result, when Lufthansa bought Airbus jets, they settled in dollars, and trades quoted in pounds would be settled in New York in dollars. That has since changed; so has how oil is traded.
The last time the petrodollar hypothesis was remotely true was in the early 1980s.
Sure but why do you think that is. What currency oil is quoted in has more to do with foreign policy than economics. Regardless of what reasons the US may have had to invade Iraq in 2001, Saddam Hussein was literally on record in 2000 for planning to switch away from quoting Iraqi oil in US dollars to the Euro[0].
There was a ton of talk about the 2001 invasions being about the US oil reserves for itself but that's based on a very simplistic understanding of US foreign policy. The US didn't annex the oil fields, it disrupted the national oil company's monopoly to allow privatization of the market and invite international (especially US and US-friendly) investors. It was really more of a hostile takeover backed by the world's largest military.
Again, I'm not claiming that this was the sole reason behind the invasion or the primary motivator, but the US has a history of privatizing nationalized industries of countries it successfully invades, overthrows or interferes in the elections of.
There's also the fact that oil is quoted in US dollars, and about 65 countries, about a third of all the countries in the world, peg their currency to the US dollar[1].
[1] https://www.investopedia.com/articles/forex/040915/countries...