Petrodollars are not a distinct currency; they are simply U.S. dollars accepted as payment by an oil exporter. Global crude oil exports averaged approximately 88.4 million barrels per day in 2020. That pace would generate annual global petrodollar supply of more than $3.2 trillion a year, assuming an average price of $100 per barrel.
Would the end of the petrodollar weaken the dollar?
The end of the petrodollar would indeed weaken the dollar, even if this would not be a mortal blow in itself. Moreover, it is especially foolhardy to ignore the status of the petrodollar because that status also has geopolitical implications.
Why do oil exporters rely on the dollar?
The dollar's global stature and wide use stem from the U.S. economy's leading global role and its openness to foreign trade and investment. These advantages proved irresistible to oil exporters, and their reliance on the dollar in turn extended its dominance. Petrodollars are dollars paid to oil-producing countries for their exports.
