New York may be about to lose its status as the world’s biggest oil-trading center. Saudi Arabia is leading the exodus. How will this shift impact America, and what are the implications for the dollar?
Saudi Arabia is a Persian Gulf Arab state, awash in vast amounts of oil, with high levels of oil production and massive oil reserves yet under its desert sands—that is the popular wisdom. However, the truth may be completely different.
Within this context, the Saudis are exploring opportunities to sell their oil on more transparent exchanges in which they feel they have some logical control over production levels and pricing in relation to world demand, and opportunities to be paid in currencies besides the anemic U.S. dollar. Such a move would be a great influence on all of the Organization of Petroleum Exporting Countries. This has crucial implications for the United States, as it could siphon oil trading from U.S. exchanges and eventually flush out the dollar as the currency of trade.
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