QUESTION: Some declare that all the power of the greenback is oil, which backed it after the gold normal fell. I do know you stated that was a handy principle, and a few now declare Trump’s journey to Saudi Arabia is Petrodollar 2.0. You managed cash for OPEC and have been even in an OPEC assembly, so who higher to handle this challenge than you? I used to be at your 1985 convention in Princeton, and there have been all of the Arab nations attending of their white robes, whereas the Hasidic Jews have been attending from the NY garment business of their black garb. That was an eye-opening convention. So my query is, does oil have any foundation for supporting the greenback, or is that this one other conspiracy principle, like gold going up with inflation?
Yours actually
SM
BTW, Anybody who refuses to interview you is a part of the Deep State propaganda.
REPLY: Sam, it’s good to listen to from you. You deliver up outdated recollections. We’ve grown outdated collectively. If I recall, you have been there together with your father. I keep in mind when he died. To start out with, the share of world commerce attributed to grease and petroleum merchandise is roughly 8-10% primarily based on the 2022 knowledge. Merchandise Commerce in 2022 globally totaled round $25 trillion (WTO knowledge). Of that, crude oil and refined petroleum product exports worldwide have been estimated to be between $2.2 and a couple of.5 trillion (relying on value fluctuations and commerce volumes). This consists of contributions from OPEC, that are solely 40% of crude exports, and non-OPEC exporters just like the U.S., Russia, and Canada.
Due to this fact, if we take the $2.5 trillion and filter out OPEC, this involves $1 trillion. Now let’s take a look at simply Saudi Arabia, with Nixon’s secret deal (memo) made in 1974 was a negotiation to not help the greenback, however to take care of the Oil Embargo of 1973. Saudi Arabia’s annual oil gross sales could be measured in each quantity (barrels) and financial worth (income), which fluctuates primarily based on manufacturing ranges, OPEC+ agreements, and world oil costs. Even when we take a look at the numbers from 1974, OpPEC was solely about 13% ($112 billion) of world merchandise commerce ($846 billion). This important share was a direct results of the 1973 oil disaster, throughout which OPEC member nations imposed an embargo and drastically elevated oil costs, resulting in a quadrupling of oil revenues.
Saudi Arabia usually exports 6.5–7.5 million barrels per day (bpd) of crude oil and petroleum merchandise. In 2023, Saudi Arabia’s oil income was estimated at $211 billion (primarily based on ~7 million bpd and ~$80/barrel). Which means that Saudi Arabia’s complete petro gross sales quantity to .0084% of world commerce. The Petrodollar 2,0 is sophistry and simply one other conspiracy principle. In the event that they priced all of the oil in yuan, it will not alter the world financial system.
