America is Losing Control of the Petrodollar

The 15th of March 2026 marked a historic day as oil aboard the Pakistani owned tanker Karachi passed safely through the straight of Hormuz.

Denominated not in US dollars but in Chinese yuan.

That same day, another vessel also went through carrying crude on a yuan aligned route.

But it challenges an agreement which has underpinned the very foundation of America’s economy, the petro dollar.

In return for American protection, the Gulf States, these six countries here, would prop up American interest and sell their oil in dollars.

But a deal that was supposed to secure American dominance instead handed a small group of countries extraordinary leverage over the most powerful country on Earth.

Since the US and Israel wiped out Iran’s supreme leader, a wave of attacks have spread across the region.

The Gulf States didn’t sign up for this.

For 50 years, their deal with America has held.

But right now, for the first time, the very countries propping up the American economy are watching the terms of that bargain fall apart.

So what happens when they decide to stop playing ball? Maybe not an immediate collapse, but a slow bleed and one that could bring America’s era of global dominance down with it.

So how did a handful of desert states end up with this much leverage over the most powerful country on Earth? To answer that, you have to understand what they’ve built and how quickly it can fall apart.

In the last century, the Gulf States have gone through an enormous transformation, largely thanks to one thing, oil.

Oil was first discovered in Bahrain in 1932, and within decades, the entire region was producing it.

And by the 1990s, that oil money had completely transformed what these places look like.

Areas which had once been nomadic desert towns suddenly became sprawling metropolises.

Dubai alone went from a modest trading port to a city of glass towers in barely a generation.

But this wasn’t just an economic boom.

It reshaped how these countries were governed.

Oil wealth was entirely statec controlled, which meant that everything, wages, subsidies, infrastructure, flowed from a centralized system financed by oil.

And in exchange for political obedience, the government distributed enough of that wealth to keep people compliant.

It’s a social contract, just not a democratic one.

And as long as it holds, it works.

But the deal only holds if two things are true.

The money keeps flowing and the region stays stable, which is why in recent decades, the Gulf States have made an enormous effort to diversify and rebrand.

Saudi Arabia has poured hundreds of billions into tourism and entertainment.

The UAE has marketed itself as a global hub for finance and innovation, and Qatar hosted the World Cup.

These countries were no longer content to simply be oil exporters.

They wanted to be players on the world stage.

Today, tourism alone accounts for roughly 12% of Saudi’s GDP and around 12% of the UAE’s.

Dubai’s international airport is the busiest in the world for international passengers.

And the region’s sovereign wealth funds manage trillions of dollars in global, more importantly, American assets.

But all of this, the skyscrapers, the airlines, the funds, is underpinned by one thing.

The perception that this is a safe, predictable place to park your money and do business.

And in just a matter of weeks, 30 years of building that perception came undone.

>> After the US and Israel launched strikes on Iran, the country quickly retaliated.

Civilian areas and military bases alike across the six nations of the Gulf were hit by missile strikes.

The biggest oil refinery in the world was shut down.

the biggest gas refinery in the world was shut down.

And this is already costing the region around 6.

7 million barrels per day.

And at current prices, it’s roughly a billion dollars every single day.

And remember, these countries aren’t democracies.

There’s no election to absorb public anger.

The social contract in every one of these countries depends on the government being able to keep the money flowing and the streets safe.

And when that breaks down, the regime itself is at risk.

But here’s the thing.

These aren’t powerless countries.

They spent 50 years quietly building themselves into the loadbearing wall of the global economy.

And if they decide America is threatening their survival, they have the tools to make Washington feel it.

Combined, they control nearly a third of global oil output every year, with by far the largest share coming from Saudi Arabia.

Even more importantly, they also control well over half of the world’s oral reserves.

Essentially, the price of oil is extremely dependent on whatever these countries decide to do or not to do.

If they were to say threaten to cut production entirely for a sustained period of time unless the US stops the invasion, they could send global energy prices soaring, which should be more than enough to pressure the United States into pulling back or at the very least discourage it from turning this into a long drawn out occupation.

And time and time again, we have seen one of the main success metrics Trump uses is the markets.

And Trump, in particular, ran a campaign promising to bring energy prices down.

So having the opposite happen just before the midterm elections would be a political nightmare.

If all of that sounds a bit extreme, it’s worth remembering that a version of this has happened before.

In 1973, in response to Western support for Israel during the Yongiper war, oil producing Middle Eastern countries led by Saudi Arabia abruptly shut off the flow of oil to the US, drying up the steady stream of Middle Eastern crude that Western economies had come to depend on and sending oil prices from $3 to $10 per barrel in just a couple of months.

This kicked off nearly a decade of high inflation across the West, peaking at over 13% in the US.

And before long, Washington began to soften its position, pushing for ceasefire negotiations and eventually getting Israel to bring the war to an end.

But while that leverage might have worked for the Gulf States a few decades ago, the truth is that the world looks very different today.

For starters, the US is way less reliant on Gulf oil than it once was.

Before the oil crisis, roughly a third of US oil came from the Gulf.

Today, that number is closer to 10%.

In addition to this, the US now produces more oil than any other country on Earth and has actually become a net exporter to a number of countries.

But whilst on the surface this may seem like the Gulf’s influence has been diminishing, in reality since 1973, their power has only grown.

In the last couple of weeks, America has unleashed its military strength.

But the truth is that the superpower’s biggest strength doesn’t come from its weapons, but the dollar.

As you may have heard before, the dollar is what’s known as a reserve currency.

Currencies used to be backed by physical commodities like gold or silver, but today they’re essentially backed up by dollars, which make up around 60% of the world’s foreign exchange reserves.

If countries want to show that their currency has value, they need to hold dollars.

Of course, that raises the question, if other countries use dollars to back up their own currency, then what’s backing up the dollar? You’d expect it to be America’s technology, its economy, or even its military strength.

But in reality, it almost entirely comes down to a quiet agreement with the Gulf States from nearly 50 years back.

One which created what’s now known as the petro dollar.

This is a pattern which comes in many forms, but pops up in the playbook of nearly every great power across history and has the power to make or break them.

At the start of the 19th century, Britain was the world’s undisputed superpower, controlling a quarter of the entire world’s land and roughly 20% of the global economy.

Because of that, global trade essentially revolved around the empire.

Cotton from India, tea from China, rubber from Malaysia, all came into British ports.

Now, when you’re at the center of a system like that, something interesting happens to your currency.

People all over the world need it.

Not because they want pounds specifically, but because it’s a common currency that people from two different countries can use.

And at its core, this creates one enormous advantage.

You can borrow enormous amounts of money without the costs that would normally come with it.

Essentially, all this new money doesn’t flood your domestic economy.

Instead, it gets absorbed by international demand.

It’s probably the most powerful advantage an empire can have, and it’s why their governments and citizens can live beyond their means for so long.

Today, the same thing happens with the United States dollar.

No matter how much money the country prints, it continues to hold its position as the world’s reserve currency and can avoid major inflation, at least for the most part.

However, that only works as long as the rest of the world keeps wanting to hold your currency.

The moment that confidence slips, the whole system unravels.

For Britain, that demand was driven by trade, spices, cotton, raw materials.

When the empire shrank, so did the need for pounds, and the system with it collapsed.

For the United States, that demand is driven by one thing, oil.

And making sure that demand for dollars continues is exactly why the Gulf States have become so important to the US.

Remember, just a few of these countries control almost 30% of the global supply of oil.

And right now, that supply is under direct attack.

The entirety of the Gulf region has effectively been transformed into an active war zone, which has forced the six states to massively cut back on production.

Then the Straight of Hormuz, a passage which 1/5if of the world’s oil passes through, was effectively shut down with 150 ships stranded, many of which would normally carry around 2 million barrels of oil a trip.

These ships are effectively sitting ducks for Iranians to target, something they haven’t hesitated to take advantage of.

Okay, so it’s worth keeping in mind that oil is one of the very few commodities that literally everybody needs.

It goes way beyond just powering cars.

It’s the fertilizer that grows food and the plastic that packages pretty much everything that we own.

The Americans, of course, knew this and they also knew that if they could tie their currency to something that the entire world needed to buy anyways, it could effectively guarantee an endless demand for dollars.

So, in the years following the 1973 oil crisis, the administration of Richard Nixon began quietly negotiating a deal with Saudi Arabia, at the time the world’s most important oil producer.

By 1975, the two countries had quietly struck a deal which would reshape the global economy for decades to come.

At the heart of that deal was an agreement.

The oil would be exclusively traded in US dollars.

And that changed everything.

Consider a fairly typical transaction in the global oil market.

Let’s say South Korea wants to buy crude oil from the United Arab Emirates.

Rather than simply buying it directly, they would first need to sell their own currency to buy dollars, which only then they could use to buy oil from the UAE.

The currency of a country that isn’t even involved in the transaction, the dollar becomes the middleman for the entire deal.

And when you start multiplying that across every country on Earth trying to buy oil from the Gulf, the scale of it is enormous.

Today, the global oil industry is worth $3.

7 trillion every year.

About 3% of the world’s GDP, and around 90% of that trade happens outside US markets, meaning trillions of dollars are constantly circulating around the world simply because countries need to buy energy, even if they have no particular interest in trading with the US directly.

This has allowed the United States to import hundreds of billions of dollars of goods from around the world without ever really having to pay for it.

Instead of sending back an equivalent amount of goods, the US sends fiscal assets like Treasury bonds, all made from a currency it can literally print for free.

But because foreign countries need dollars to buy oil, they’re just about happy to let the US get away with it.

In fact, the United States has run a trade deficit every single year since 1976, meaning for 50 years straight, it has taken more from the world than it has given back.

In 2025 alone, that deficit came to nearly $900 billion.

Add all of these deficits up and the US has accumulated roughly $26 trillion in net foreign debt, goods and services, all essentially paid for with paper.

For ordinary Americans, that has effectively acted as a massive hidden subsidy worth nearly $3,000 per person every single year.

It’s what has allowed the American middle class to maintain living standards that for most of the 20th century were the envy of the world, all whilst funding the largest military in history.

However, the flip side is that it also gives the Gulf States an enormous amount of leverage.

If those countries ever decided to price their oil in something else, say the Chinese yuan or gold, much of the global demand that underpins the dollar’s dominance would vanish.

And right now, for the first time in decades, that possibility feels less theoretical than ever.

Many of Trump’s supposed Gulf Arab allies are already reviewing their investments in the States, just months after pledging trillions of dollars worth in investment.

and the anger is barely being concealed.

One Dubai billionaire publicly asked why the Gulf should bear the consequences of an escalation nobody had asked for before quickly deleting the post.

These are America’s closest allies in the region.

And right now they are furious.

The only reason they had stuck to the petro dollar deal in the first place is because the US offered them something just as valuable in return, military protection.

And if it wasn’t already obvious, the US isn’t holding up their side of the deal.

For starters, none of the Gulf states wanted the war with Iran in the first place.

Just days before it began, they were flying officials to Washington in a lastditched attempt to prevent it.

Something that was clearly ignored.

And since the war started, that treatment has only gotten worse.

After the bombing began, reports emerged that Qatar’s stockpile of Patriot interceptor missiles could last as little as 4 days.

Yet, America refused to help restock them.

And this also isn’t the first time Washington has left its Gulf partners out to dry.

In 2019, Iranian drones struck Saudi Arabia’s oil facilities, temporarily knocking out about 5% of the world’s oil supply.

But despite Saudi requests, America didn’t do anything.

Now, if this were any other country, then the Gulf States would have likely abandoned their side of the deal long ago.

But doing that with the United States is far more difficult.

Right now, global oil markets are entirely built around dollars, and that’s the way they’ve been for nearly half a century.

So if a Gulf state tomorrow announced it was switching to a different currency, buyers around the world would face real costs adapting to that change, that would then force sellers to accept slightly lower prices to compensate buyers for that very inconvenience.

So even if a lot of individual countries are fed up with the US, nobody wants to be the first one to make the move.

That is as long as there isn’t a very solid alternative.

At the end of the day, the Gulf States don’t just need a currency.

They need a guarantor.

somebody who can protect their assets in one of the most dangerous and unstable regions in the entire world.

For half a century, it was America who was able to do that.

But today, that isn’t really the case.

Over the last two decades, China’s share of world trade has increased by around 7 times.

And today, they make up about 14% of all the goods exported each year.

Add to that the fact that their military and navy are now the largest in the world by personnel.

It’s not super surprising that the Gulf States have quietly started to pivot.

China is already Saudi Arabia’s largest trading partner and the two countries have signed a currency swap agreement that allows trade to be settled between them in Yuan and Rial, cutting the dollar out entirely.

And unlike America, China doesn’t lecture them about human rights, doesn’t drag them into a war on their doorstep, and is willing to sell them advanced military technology without conditions attached.

Again, none of this is going to break the system on its own, but each one chips away at the assumption that dollars are the only game in town.

Going back to the original petro dollar deal that was struck in the 70s, the arrangement was just that Saudi Arabia would price its oil exclusively in dollars.

And in return, the United States would provide security guarantees and military support.

But given that, there was obviously a pretty big question as to what the Gulf States would do with all the dollars they’d acquired from selling oil.

At the time, nobody really knew what this was, and it wasn’t until 2016 that this was finally revealed.

The secret? It was invested straight back into US financial assets, meaning money from around the world that was being used to buy oil ended up flowing straight back into the United States economy.

And the scale of this recycling was enormous.

By 1977, Saudi Arabia alone held 20% of all US debt owned by foreign governments.

When the figures were finally disclosed in 2016, official Saudi holdings stood at around $117 billion.

And for the US, that money is essential.

When Washington spends more than it earns, which it has done for almost every year in decades, it issues treasury bonds, essentially IUS that investors buy today with a promise to be repaid later with interest.

The more investors willing to buy that debt, the lower the interest rate Washington has to offer.

And the fewer buyers, the higher that rate has to go to attract them.

Effectively, the more people willing to lend to the US government, the cheaper it is for them to borrow money.

And after literally decades of doing this, the US has ended up with an insane amount of debt now worth nearly $39 trillion.

Servicing that debt already costs the government well over a trillion dollars a year in interest payments, making it the largest single line item in the entire federal budget.

To put that into perspective, it works out to roughly $3,000 per American every single year.

And if demand for US savings were to dry up, say because the US was to alienate one of its key buyers, that number climbs very quickly.

Just a two percentage point rise in the interest rate would cost roughly $700 billion a year.

That would force Washington into an impossible choice.

Either cut enormous parts of the federal budget, raise taxes dramatically, or borrow even more money just to pay the interest on the money it has already borrowed.

And this is really the root of why the Gulf States holds so much power over the US, at least in the short term.

What happens next will probably not be dramatic or immediate.

The global financial system is far too large and far too deeply embedded to suddenly collapse because of a single conflict.

But systems like the one built around the petro dollar rarely end in a single moment.

More often, they begin to erode slowly as countries gradually start hedging their bets.

And in fact, that process has already started.

Saudi Arabia’s public investment fund has been shifting billions into Asian markets.

Gulf sovereign wealth funds, which collectively manage over $3 trillion, have been quietly diversifying away from US assets, and Saudi Arabia is deepening its defense relationship with China.

None of this makes headlines in the way an oil embargo would.

But this is what the slow bleed actually looks like.

Not a dramatic break, but a gradual rebalancing.

In a strange way, Trump’s promise to put America first might actually end up doing the opposite.

The reality is that every country, no matter how strong, is in some way relying on its allies.

In the short term, it might make sense to ignore them, relentlessly pursuing your own objectives.

But isolating your allies in this way inevitably comes with a cost.

And in the case of the US, that might mean the end of the dollar system as we know it.

Now, with Trump’s announcement that the military budget of the United States will actually be 1.

5 trillion next year, the largest in its history, and with President Trump announcing electricity demand needs to triple at the very least by 2030 to meet AI buildup, billionaire Robert Freedelland has said that the world is sleeping into a copper crisis and that if somebody’s pointing a gun at you, you need that copper to shoot back.

Copper demand is beyond belief.

Supply is vanishing and a copper shortage is just a matter of time now.

President Trump has taken massive action to bring back copper production to US soil, including an executive order and enacting a 50% tariff on imports.

In fact, Stanley Draeniller, who many consider to be one of the all-time greatest macro investors, a self-made billionaire with a track record of never having a losing year, is very bullish on copper.

Look at the global production outlook.

Right-win demand is projected to sore by 50% by 2040.

The United States of America and China are battling over mineral supply chains and technological supremacy because globalization stepped out of equilibrium.

And you can see just how when looking at how the strategy of both superpowers is shaping up.

Today, I want to showcase a company that is actually trading near its all-time lows right now, down nearly 62% in the past 45 days.

the owner of the Majuba Hill Copper Project and past producing mine in the state of Nevada.

The sponsor of today’s video, Giant Mining Corp.

, ticker symbol BFGF, available on Interactive Brokers and Charles Schwab.

Giant Mining has rarely, if ever, traded this cheap.

This is one of the lowest market caps in its history.

It began 2026 with a breakout over record setting copper prices, and today it’s sitting at around 11 US cents.

Since President Trump’s inauguration, his administration has aggressively pursued policies to secure US mineral independence with copper emerging as a flash point.

What we’ve been seeing is the very first chance to be part of the rebirth of the American copper mining business.

Giant Mining ticker BFGFF owns a pass producing copper mine in Nevada, one of America’s best and most cherished mining jurisdictions.

Howard Lutchnik said, “American industries depend on copper and it should be made in America.

No exemptions and no exceptions.

” And Trump even said that copper should be made in America and it’s time for copper to come home.

Historic underground mines at the Majuba Hill project produced copper, tin, and silver from the early 1900s to the 1950s, including 2.

8 8 million of copper, 184,000 oz of silver, and 5,800 oz of gold.

All of these factors and the following ones below are the ones that led to a significant bullish opinion about giant mining.

The infrastructure is ready.

Access roads, power supply, transportation, water supply, or stockpiles, and established road access, power nearby, and space for potential processing infrastructure as the project advances.

Do your own homework on giant mining.