"Iran conflict could test the foundations of the petrodollar regime"
What would be the consequences of a US Withdrawal from the Persian Gulf?
A subscriber asked if I had heard any more on my earlier Petrodollar article so I did a little research and found a bit of confirmation: ( Note: “fx” stands for foreign exchange)
From fxstreet.com:
“Deutsche Bank’s Mallika Sachdeva argues that the Iran conflict could test the foundations of the petrodollar regime and, by extension, the Dollar’s role as the world’s reserve currency. The bank highlights how shifts in Middle East oil trade, sanctions, and alternative payment systems may gradually erode Dollar dominance in global trade and savings.”
Iran conflict and petrodollar pressures
“The long-term legacy of the Iran conflict for the dollar could be the way it tests the foundations of the petrodollar regime. If fault lines are further exposed, there could be significant downstream effects to the dollar’s use in global trade and savings, and the dollar’s role as the world’s reserve currency.”
“The foundations of the petrodollar regime have been under pressure even before this conflict. Most Middle East oil is now sold to Asia not the US; sanctioned oil from Russia and Iran has already been trading off dollar rails; Saudi Arabia has been localizing defence, and experimenting with forms of non-dollar payment infrastructure such as Project mBridge.””
Project mBridge: (Wikipedia)
“mBridge (a.k.a. Multiple CBDC Bridge) is a multiple central bank digital currency platform developed to support real-time, peer-to-peer, cross-border payments and foreign exchange transactions using CBDCs. Based on a blockchain called the mBridge Ledger, the platform is designed to ensure compliance with jurisdiction-specific policy and legal requirements, regulations, and governance needs.[1]
Currently five entities are jointly developing mBridge. They include the Hong Kong Monetary Authority, the Bank of Thailand, the Central Bank of the United Arab Emirates, the Digital Currency Research Institute of the People’s Bank of China, and the BIS Innovation Hub Hong Kong Centre.[1] The Saudi Central Bank joined in June 2024.[2]”
.. “In September 2021, the Bank for International Settlements, in collaboration with Thailand, Hong Kong, China, and the UAE, published a report regarding the second phase of the mBridge project, aiming to establish a system involving multiple CBDCs to enable faster, more cost-effective, and efficient methods for conducting cross-border transfers and foreign exchange operations.[4]”
Elsewhere:
Trita Parsi: With high oil prices and higher oil sales, and a $2 million toll to pass the strait, Iran faces de-facto sanctions relief. Iran is asking for reparations from the US and Israel and has little financial incentive to compromise.
Earlier:
This post an update on an earlier post: Why Trump Can’t “Chicken Out” in Iran