SAUDI ARABIA has decided NOT TO RENEW its 50-year-old AGREEMENT with the United States. This stipulated that the Arab nation would sell its oil on the Global Market exclusively in dollars, according to various media reports.
This decision is part of broader changes in the Global Financial landscape, highlighting the diminishing influence of the DOLLAR and the rise of a NEW financial paradigm.
The agreement, commonly known as the Petrodollar Agreement, was signed in 1974, just three years after the United States abandoned the gold standard under President Richard Nixon. This agreement played a crucial role in establishing the US dollar as the World’s Primary Reserve Currency.
A RESERVE CURRENCY is one held in substantial quantities by various Governments and Institutions for THEIR RESERVES.
The Saudi agreement with the United States expired on June 9, 2024, and the Saudis have NOT ANNOUNCED A RENEWAL.
The Agreement was Favorable for Both Countries, for decades, the international oil trade conducted in dollars has been highly advantageous for the United States of America.
Reports in mid-2024 indicated that a 50-YEAR security-for-oil agreement between Saudi Arabia and the United States, which underpinned the “petrodollar” system, EXPIRED on June 9, 2024, and was NOT RENEWED
While this does not mean the dollar is banned, it means Saudi Arabia is NO LONGER OBLIGATED to sell OIL EXCLUSIVELY in U.S. dollars and is NOW exploring other currencies.
This practice has generated significant GLOBAL DEMAND FOR DOLLARS, helping to maintain the currency’s strength even as the US has substantially increased its national debt and money supply. Additionally, it has led to an influx of capital into the country, as nations often invested their oil revenues in US government bonds. This dynamic has ensured a consistent demand for both US government debt and the dollar.
The Saudis SOLD OIL and invested in US Government Bonds, receiving MILITARY PROTECTION and FAVORABLE TREATMENT in the MIDDLE EAST in return. This arrangement has been a KEY factor in the relative stability of Saudi Arabia’s Governance compared to other Arab countries. (
Following the agreement, the United States gained access to Saudi airspace and established military bases there. This facilitated various military operations in the Middle East and enhanced US influence in the region.
The MOVE of Equipment by USA to Israel from GCC Bases affected the 50 YEAR DEFENSE arrangement between USA & GCC
The basic U.S.–GCC bargain—Gulf oil and dollar investments flowing to America in exchange for U.S. military protection—still holds, but recent U.S. moves to rush equipment to Israel (air-defence munitions, aircraft carrier groups, fighter squadrons) have made Gulf capitals nervous that Washington’s focus is shifting. USA’s OPERATION EPIC FURY.
The Pentagon has publicly sent carriers, warships and extra munitions to Israel and “augmented” fighter squadrons in the region after October 2023, which Gulf officials read as prioritizing Israel’s immediate needs.
At the same time, Washington and the GCC have kept formal defence work going: May 2024 joint working groups on integrated air-and-missile defence and maritime security reaffirmed pledges to build a GCC-wide early-warning and IAMD shield, and U.S. officials stress that force-posture changes are “defense and deterrence” for all partners.
IN PRACTICE, GULF STATES see A MIXED SIGNAL: the U.S. still trains, arms, and coordinates with GCC militaries (the 2024 working groups, continued arms sales, and U.S. troops in Saudi Arabia), BUT THE VISIBLE SURGE OF arms TO ISREAL during the wars (GAZA and IRAN) highlights that ISREAL REMAINS Washington’s FIRST TIER ALLY.
That has spurred GCC calls for a more institutionalized “joint Gulf missile defence shield” and deeper interoperability—essentially a push to make the U.S. commitment to Gulf security concrete beyond ad-hoc crisis moves.
The defence arrangement is not cancelled, BUT the equipment transfers to Israel have RAISED GULF CONCERNS and accelerated GCC efforts to lock in multilateral U.S. guarantees rather than rely on informal protection.
DECLINE in Influence of the USA
The shift in Saudi Arabia’s direction is significant as it reflects the waning influence of the United States on the international stage. It also highlights a change in the primary buyers of Saudi oil.
In 2000, the majority of Saudi oil was sold to the USA and Europe, BUT NOW, the bulk of it goes to CHINA and INDIA.
In 2000, 38 percent of Saudi oil exports went to Europe and North America; by 2022, this had dropped to about 18 percent. Conversely, exports to China and India have surged from 6 percent to 48 percent during the same period.
The Kingdom’s OIL sales are now likely to increase in terms of YUAN, EURO, RUBLES, and YEN. In fact, Saudi Arabia has been moving in this direction for several years. Early last year, the country’s leaders announced that they MIGHT START SELLING OIL IN CURRENCIES OTHER THAN THE USA DOLLAR.
CURRENTLY, most Saudi oil from their oil companies is sold to CHINA, and the Saudis must also maintain good relations with RUSSIA to help regulate oil prices.
Last year, Saudi Arabia exported only $17 Billion worth of oil to the USA, a DECREASE of nearly $2 Billion compared to five years ago. This decline is partly due to the SHARP INCREASE in US OIL PRODUCTION over the past few decades, reducing the country’s dependence on imported oil.
The US Dollar Continues to DOMINATE the Oil Market
While the majority of international oil transactions still occur in dollars, their share is declining. According to the Wall Street Journal, nearly 80 percent of oil sales are conducted in dollars. However, countries like Russia, Iran, Saudi Arabia, and China are increasingly shifting to other currencies for their transactions.
This trend gradually undermines the dollar’s global position, contributing to inflation in the US, putting upward pressure on interest rates, and weakening the American bond market. The latter is particularly significant, as developments in the US government bond market are already steering the world’s leading country towards a debt crisis.
The Saudis have pegged their currency, the riyal, to the US dollar, requiring them to hold sufficient dollar reserves to maintain the exchange rate. However, they have also announced plans to join the Bridge international payments system, an alternative to SWIFT developed by BRICS. This move would allow them to use a non-dollar system for payments in the future if necessary.
The main REASON for the slow and gradual SHIFT away from the DOLLAR is largely due to costs and scale. Since the dollar remains widely used, it is advantageous for many countries to continue using it. Additionally, there are currently few viable alternatives; for instance, the Chinese yuan has not yet achieved the necessary global prominence.
Saudis End 50-Year Petrodollar Agreement with the US – Tavex United Kingdom
THE SITUATION BASED ON RECENT REPORTS :
END of Exclusivity: Saudi Arabia now has the freedom to sell oil in various currencies, including the Chinese Yuan, Euro, or Yen, reducing reliance on the dollar.
De-dollarsation Trend: This move aligns with a broader trend among BRICS+ nations (including Saudi Arabia, UAE, and Iran) to explore alternatives to the U.S. dollar for energy payments to reduce strategic vulnerability to U.S. financial sanctions.
WHY It Matters: For decades, the petrodollar system ensured global demand for the U.S. dollar.
The SHIFT could potentially WEAKEN the dollar’s dominance, reduce US borrowing power, and increase inflationary pressures in the US.
Market Reality: Despite the expiration, many sales are still converted back to U.S. dollars due to its stability and widespread acceptance.
THE DOLLAR remains the dominant global reserve currency, BUT its share in OIL trading has DROPPED from 71% in 2000 to ROUGHLY 57% by 2026.
GEOPOLITICAL/MULTIPOLAR/TRIPOLAR FACTORS : The SHIFT reflects a CHANGING RELATIONSHIP where Saudi Arabia is STRENGTHENING TIES with CHINA and RUSSIA and reducing its RELIANCE on U.S. security guarantees.
https://chaipredict.com/resources/expiration-saudi-us-petrodollar-agreement
https://tavexbullion.co.uk/saudis-end-50-year-petrodollar-agreement-with-the-us/
https://arabcenterdc.org/resource/exploring-the-options-arab-oil-exporters-and-the-us-dollar/
Percentage of EACH GCC Country OIL & GAS Sales in US DOLLARS
Roughly, the GCC’s oil-and-gas EXPORT PIE is dominated by THREE COUNTRIES.
Saudi Arabia – about 11.1 million bbl./day of oil, roughly 45-50 % of GCC oil output.
United Arab Emirates – about 4.2 million bbl./day, around 17-20 % of the GCC total.
Kuwait – about 2.9 million bbl./day, roughly 12-15 %.
Qatar– tiny oil output but the GCC’s gas leader (≈13 % of world gas reserves and the biggest LNG exporter), so it claims most of the gas-sales share.
Oman and Bahrain – smaller producers, each under 5 % of GCC oil and gas revenues.
Those figures come from recent EIA production data, which shows Saudi Arabia, UAE, and Kuwait together account for the bulk of GCC oil production.
Exact DOLLAR -SALES PERCENTAGES SHIFT with prices, but the RANK ORDER stays:
Saudi Arabia ~HALF
UAE ~ONE-FIFTH
Kuwait ~ONE-EIGHT
Qatar leading gas exports and
Oman/Bahrain making up the rest.
https://www.eia.gov/tools/faqs/faq.php?id=709&t=6
IS GCC a SAFE place for Business and Vacation, NOW shattered with USA’s OPERATION EPIC FURY. ?
Operation Epic Fury (the U.S. strike on Iran in Feb 2026) DID RATTLE the Gulf’s RISK PICTURE—INVESTORS saw a brief spike in insurance premiums and some caution around projects near the Strait of Hormuz. But the GCC’s core business hubs (Riyadh, Abu Dhabi, Doha, Dubai) HAVE NOT “shattered” as SAFE ZONES.
The U.S. and GCC quickly REAFFIRMED defence-cooperation PLEDGES, and most multinationals continue operating, treating the episode as a GEOPOLITICAL FLARE-UP rather than a permanent loss of safety. EXPECT tighter security planning and higher contingency costs, BUT the Gulf still ranks among the region’s MORE STABLE places for business.
SUNNI and SHIA Sects in ISLAM
SUNNI and SHIA are the TWO PRIMARY SECTS or denominations of ISLAM. They represent a Theological and Political DIVIDE over the rightful SUCCESSOR to Prophet Muhammad, (PBUH) originating in the 7th CENTURY. BOTH are MUSLIMS , sharing CORE beliefs, yet they DIFFER in LEGAL INTERPRETATION, RITUAL PRACTICES, and RELIGIOUS AUTHORITY.
As of 2026, there are approximately 2.06 BILLION Muslims GLOBALLY, with the MAJORITY population in approximately 51 Countries.
The following COUNTRIES have the LARGEST number of Muslim RESIDENTS based on recent 2026 estimates:
Rank Country Estimated Muslim Population Share of Country Population
1 Indonesia ~242.7 million 87.0%
2 Pakistan ~240.8 million 96.3%
3 India ~200.0 million 15.3% (Minority)
4 Bangladesh ~150.8 million 91.0%
5 Nigeria ~124.0 million 53.5%
6 Egypt ~104.0 million 95.0%
7 Iran ~88.0 million 99.8%
TOP 7 Countries by Muslim Percentage are: Maldives: ~100%; Mauritania: ~99.9%.
Somalia: ~99.8%; Afghanistan: ~99.7%; Tunisia: ~99.5%; IRAN: ~99.5%; and Western Sahara: ~99.4%
Note on INDIA: Despite having the THIRD-LARGEST Muslim population in the WORLD, India is a Hindu-majority country; its Muslim population is the largest “RELIGIOUS MINORITY ” group GLOBALLY.
SUNNI Islam (approx. 85-90%): View themselves as the orthodox branch, emphasizing the sunnah (traditions) of Prophet Muhammad and favoring the selection of leaders based on consensus (caliphs).
SHIA Islam (approx. 10-15%): Believe that leadership should have remained within the Prophet’s family, starting with his cousin and son-in-law, Ali. They place high importance on the spiritual authority of divinely appointed Imams.
KEY Differences:
Leadership/Succession: The CORE DIVIDE centered on whether LEADERSHIP was POLITICAL (Sunni perspective) or DIVINE (Shia perspective).
Practices: While fundamentally similar in faith, minor variations exist in daily prayer rituals and religious holidays.
Geopolitics: SUNNIS form the majority in most Islamic countries, while SHIA populations are concentrated in Iran, Iraq, Bahrain, and Azerbaijan.
BOTH GROUPS agree on the FINDAMENTAL TENETS OF ISLAM, including the Quran, the ONENESS of God, and the PROPHETHOOD of Muhammad. (PBUH)
SHIA Muslims form significant, THOUGH MINORITY , communities within the SUNNI-majority GCC (Gulf Cooperation Council) countries, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) with the HIGHEST concentrations in BAHRAIN and KUWAIT. Estimates for SHIA citizens vary by country, roughly: 45–50% in Bahrain; 20–35% in Kuwait, 10-15% in Saudi Arabia, 10% in the UAE, and 5-10% in Oman.
Regional Dynamics
Shia Crescent: The term “Shia Crescent” refers to the region from Iran through Iraq, Syria, and Lebanon to the Gulf, where Shia influence is significant.
Iran’s Influence: Iran provides support to Shia communities and militias in these countries, which has intensified sectarian tensions with Saudi Arabia.
Conflict: Many Shias in these areas, particularly in Lebanon, Iraq, and Pakistan, have been affected by extremist Salafi groups targeting them as heretics.
The DIVIDE between SUNNIS and SHIA is the largest and oldest in the history of Islam.
Members of the TWO SECTS have co-existed for CENTURIES and share many fundamental beliefs and practices. But THEY DIFFER in doctrine, ritual, law, theology, and religious organisation.
Their LEADERS also often seem to be in COMPETITION. From Lebanon and Syria to Iraq and Pakistan, many recent conflicts have emphasized the SECTARIAN divide, TEARING communities apart.
Who are the SUNNIS?
The OVERWHELMING MAJORITY of the WORLD’S more than 1.5 Billion Muslims are SUNNIS – estimates suggest the figure is somewhere between 85% and 90%. In the Middle East, Sunnis make up 90% or more of the populations of Egypt, Jordan, and Saudi Arabia. SUNNIS regard themselves as the ORTHODOX branch of Islam.
The name “SUNNI ” is derived from the phrase “Ahl al-Sunnah”, or “People of the Tradition“. The tradition in this case refers to practices based on what the Prophet Muhammad said, did, agreed to or condemn.
ALL MUSLIMS are guided by the SUNNAH, but SUNNIS stress its PRIMACY. SHIA are also guided by the wisdom of Muhammad’s descendants through his son-in-law and cousin, Ali.
Sunni life is guided by FOUR SCHOOLS of LEGAL thought, each of which strives to develop practical applications of the Sunnah.
The SUNNI FOUR SCHOOLS of Thought (Madhahib) are the PRIMARY LEGAL interpretations in Sunni Islam, comprising the HANAFI, MALIKI, SHAFI’I, and HANBALI Schools. These FOUR schools, founded by renowned scholars, differ in their methodology for applying Islamic law (Fiqh), rather than core belief, and are all considered equally valid interpretations of Sharia.
The FOUR Main Sunni Madhahib
Hanafi School: Founded by Imam Abu Hanifa, it is the most widely followed, known for using rational reasoning (ra’y) and textual sources. It is prevalent in Turkey, Pakistan, India, Bangladesh, and Central Asia.
Maliki School: Founded by Imam Malik ibn Anas, it emphasizes the practices of Medina (where the Prophet lived) and is dominant in North and West Africa.
Shafi’i School: Founded by Imam al-Shafi’i, it emphasizes a precise methodology of looking at the Qur’an and Hadith. It is widespread in Egypt, Somalia, Yemen, Indonesia, and Malaysia.
Hanbali School: Founded by Imam Ahmad ibn Hanbal, it adheres strictly to the Quran and Hadith (traditions) and is predominant in Saudi Arabia.
KEY Aspects
Foundation: All schools base their rulings on the Qur’an and Sunnah (teachings of the Prophet Muhammad).
Differences: They differ mainly in matters of secondary importance, such as specific rituals or legal interpretations, rather than fundamental pillars of faith.
Validity: The 2005 Amman Message formally recognized all FOUR SCHOOLS as LEGITIMATE INTERPRETATIONS of SUNNI Islam.
Who is the SHIA?
Shia constitute about 10% of all Muslims, and globally their population is estimated at between 154 and 200 million.
Shia Muslims are in the majority in Iran, Iraq, Bahrain, Azerbaijan and, according to some estimates, Yemen. There are also LARGE Shia communities in Afghanistan, India, Kuwait, Lebanon, Pakistan, Qatar, Syria, Turkey, Saudi Arabia, and the UAE.
In EARLY ISLAMIC HISTORY, the SHIA were a movement – literally “SHIAT ALI ” or the “PARTY of ALI”. They claimed that ALI was the RIGHTFUL SUCCESSOR to the Prophet Muhammad as LEADER (IMAM) of the Muslim community following his death in 632.
ALI was assassinated in 661 after a five-year caliphate that was marred by civil war. His sons, Hassan and Hussein, were denied what they thought was their legitimate right of accession to the caliphate.
Hassan is believed to have been poisoned in 680 by Muawiyah, the first caliph of the Sunni Umayyad dynasty, while Hussein was killed on the battlefield by the Umayyads in 681. These events gave rise to the Shia concept of MARTYRDOM and the rituals of grieving.
There are THREE MAIN BRANCHES of SHIA Islam today – the ZAIDIS, ISMAILIS and ITHNA ASHARIS (Twelvers or Imamis). The Ithna Asharis are the largest group and believe that Muhammad’s religious leadership, spiritual authority and divine guidance were passed on to 12 of his descendants, beginning with Ali, Hassan, and Hussein.
The 12th Imam, Muhammad al-Mahdi, is said to have disappeared from a cave below a MASJID in 878. Ithna Asharis believe the so-called “awaited IMAM” did not die and will return at the end of time to restore JUSTICE ON EARTH.
The IRANIAN revolution of 1979 launched a radical SHIA Islamist agenda that was perceived as a CHALLENGE to conservative SUNNI regimes, particularly in the GULF.
TODAY , many conflicts in the REGION have strong SECTARIAN overtones.
The CURRENT CONTINUING CONFLICT with IRAN, will have severe LASTING effects in the GCC Countries.
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