Petrodollar
The so-far dominant, self-sustaining system of selling oil in US dollars through extraction enforcement. Replaced the gold standard with military might and more money.
How We Say It
pe·troh·dol·ər
Where It Comes From
Coined by Georgetown economist Ibrahim Oweiss in 1973 following the Arab oil embargo and the Nixon administration's decision to take the dollar off the gold standard. The arrangement formalized by the US-Saudi agreement of 1974.
How It's Been Used
The petrodollar system — Saudi Arabia and OPEC pricing oil in dollars and recycling oil revenues into US Treasury bonds — gives the dollar its status as global reserve currency and allows the US to run persistent trade deficits without the consequences other countries would face. It is why the US can sanction countries by cutting off their dollar access, and why challenges to dollar-denominated oil pricing (Saddam Hussein's 2000 switch to euros, Iran's attempts to trade in other currencies) are taken seriously as strategic threats.