Petrodollar

The petrodollar refers to U.S. dollars used to buy and sell oil globally. Since the 1970s, most countries prefer to trade oil in dollars because the U.S. agreed to buy oil from countries like Saudi Arabia in dollars, and in return, those countries often held their oil revenues in dollars. This system increased the demand for U.S. dollars worldwide, strengthening the dollar’s value and supporting America’s economic influence. In essence, the petrodollar links global oil trade with the U.S. dollar, making the dollar a dominant reserve currency and impacting international economic stability.