Since January 2015, the world as a whole\u00a0has consumed an average of 94 million barrels of oil per day. \u00a0With 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. \u00a0Some countries even go to war over these fluctuations. \u00a0Almost\u00a0every oil exporting country in the world exclusively sells their oil in U.S. dollars, so nations are forced to hoard large amounts of\u00a0U.S. currency.<\/p>\n
How did we get here?<\/p>\n
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. \u00a0In return, President Nixon offered military protection of Saudi oil fields. \u00a0The same offer was extended to each of the world’s key oil producing countries, and by 1975 every member of the\u00a0Organization of the Petroleum Exporting Countries (OPEC)<\/em> agreed to sell their oil in U.S. dollars. \u00a0Before this point in time, the U.S. dollar had been backed by gold, but is now tied to foreign oil. \u00a0Within a span of three years, every oil exporter in the world was forced to maintain a constant supply of U.S. currency. \u00a0In order to get U.S. dollars, oil exporting countries would have to send physical goods to America. \u00a0This was the birth of the Petrodollar.<\/p>\n Currently there are two countries that don’t sell their oil using the Petrodollar: Syria and Iran.<\/p>\n