Conflict Oil

Since January 2015, the world as a whole has consumed an average of 94 million barrels of oil per day.  With every barrel containing 159 liters, this is an astonishing rate of consumption. The world’s economy is so intertwined with our consumption of oil, that any deviation from the norm has a profound financial impact on oil importing and oil exporting countries.  Some countries even go to war over these fluctuations.  Almost every oil exporting country in the world exclusively sells their oil in U.S. dollars, so nations are forced to hoard large amounts of U.S. currency.

How did we get here?

In 1973, United States President Nixon asked King Faisal of Saudi Arabia to accept only U.S. dollars as payment for oil and to invest any excess profits in U.S. treasury bonds, notes, and bills.  In return, President Nixon offered military protection of Saudi oil fields.  The same offer was extended to each of the world’s key oil producing countries, and by 1975 every member of the Organization of the Petroleum Exporting Countries (OPEC) agreed to sell their oil in U.S. dollars.  Before this point in time, the U.S. dollar had been backed by gold, but is now tied to foreign oil.  Within a span of three years, every oil exporter in the world was forced to maintain a constant supply of U.S. currency.  In order to get U.S. dollars, oil exporting countries would have to send physical goods to America.  This was the birth of the Petrodollar.

Currently there are two countries that don’t sell their oil using the Petrodollar: Syria and Iran.

This consumption story map will focus on the how the consumption of oil and the Petrodollar have led to conflict in Syria.  Click here.