Deutsche Bank Report: Petrodollar System Faced Triple Pressure Before the War

Gate News reports that on March 25, Deutsche Bank released a report analyzing the current state of the petrodollar system (referring to the financial system where oil is priced in dollars and supports the dollar’s international status). Strategist Marika Sahdevwa pointed out that the system was under pressure even before the outbreak of war. The report states that the petrodollar system is supported by three core elements: U.S. demand for oil, oil priced in dollars, and security relations between the Gulf region and Washington, all of which are currently under stress. First, the U.S. has become a net energy exporter and no longer relies heavily on Middle Eastern oil supplies. Second, the pricing of oil in dollars had already begun to deteriorate before the war, with many countries pushing for energy trade to be conducted in their local currencies and making some progress over the years. Third, the war has cast doubt on the U.S. protection umbrella policy and the Gulf region’s trust in it. Specifically, most Middle Eastern oil flows to Asia; sanctioned Russia and Iran sell oil in non-dollar currencies; Saudi Arabia is localizing its defense industry and attempting to conduct oil payments in non-dollar currencies.