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International Economics

The Petrodollar System Explained: Historical Origins, Energy Security, and Sovereign Wealth Funds

Executive Definition: The Petrodollar System Explained describes the global geopolitical and macroeconomic monetary arrangement established in the mid-1970s whereby crude oil—the world’s most vital industrial commodity—is priced and transacted almost exclusively in United States dollars (USD). Formalized through secret bilateral negotiations between the United States and the Kingdom of Saudi Arabia following the collapse of ... <a title="The Petrodollar System Explained: Historical Origins, Energy Security, and Sovereign Wealth Funds" class="read-more" href="https://economicstheory.co/petrodollar-system-explained-historical-origins-energy-security/" aria-label="Read more about The Petrodollar System Explained: Historical Origins, Energy Security, and Sovereign Wealth Funds">Read more</a>

November 3, 2026 · 12 min read

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