Petrodollar System: What It Means for UK Investors
Most of your global tracker is priced in dollars. The reason it works that way is a 1971 deal between Nixon and the Saudis, and the deal is now visibly fraying at the edges.
How dominant is the US dollar in 2026?
Dedollarisation at the margins, but the dollar still anchors world finance.
Key takeaways
The 1944 Bretton Woods agreement made the US dollar the world reserve currency, backed by gold at $35 per ounce.
Nixon ended gold convertibility in 1971, but the dollar kept its dominance through the petrodollar arrangement with Saudi Arabia.
Reserve currency status lets the US borrow cheaply and run persistent deficits, which affects global interest rates, inflation, and asset prices.
BRICS nations are exploring alternatives, but replacing the dollar would take decades and faces structural barriers most commentators underestimate.