Commerzbank’s Volkmar Baur argues that fears over an end to the petrodollar do not automatically imply a loss of the US Dollar’s reserve status. He notes Gulf oil’s declining share in global exports, the stagnation of Oil volumes, and the rising dominance of semiconductor trade, with Taiwan’s USD‑invoiced chip exports and Treasury holdings now rivaling Gulf petrodollar flows.

From Gulf oil to Taiwan chips

"The genius of the petrodollar agreement for the US was that everyone needs oil. And by striking the agreement with Saudi Arabia, then the world’s largest oil producer, the US set the global standard. A currency must have three characteristics: it must serve as a medium of exchange for goods, it must serve as a store of value, and it must serve as a unit of account."

"By having oil traded globally in US dollars, all three of these characteristics were cemented for the US dollar on the international stage. Everyone in the world had to buy oil, use the US dollar as a medium of exchange to do so, know how much oil currently costs in US dollars, and the Gulf states stored that value in US dollars in US Treasury bonds."

"So does a possible end to the petrodollar mean the end of the US dollar as the world’s reserve currency? I have my doubts."

"First, the Gulf region is no longer as important to global oil trade as it once was. While around 55% of all global oil exports came from the Gulf region in 1980, by 2024 that figure had dropped to less than 35%. The US itself had already surpassed Saudi Arabia as the world’s largest exporter by 2020."

"However, if we look at volume, global oil exports peaked as early as 2016 and have at best stagnated since then."

"In 2020 and 2021, when oil demand was low due to the pandemic, more integrated circuits- i.e., computer chips - were exported globally in US dollar terms than crude oil. A rising oil price did change this again in 2022 and 2023."

"For the US dollar, it is therefore now more important that computer chips are traded in US dollars than that oil from the Gulf region is traded in USD."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)