(Photo from Pixabay)
An unintended consequence of the Iran war is that it is pushing some away from the petrodollar according to reports like the following:
Gulf War Tests the Foundations of the Petrodollar
March 25, 2026
The ongoing war in Iran is forcing Gulf states to question the value of the U.S. security guarantee. Since the U.S. and Israel launched strikes on February 28, it has been the Gulf neighbors that have borne the brunt of retaliatory missiles and drone attacks. Critical energy infrastructure has been damaged, economies disrupted, and confidence shaken in what was long assumed to be an unassailable U.S. protection umbrella.
The Petrodollar Bargain
Beyond the immediate military consequences, the conflict has triggered a potential rethink of the Gulf’s financial, trade, and military ties, particularly those underpinning the petrodollar system and the hundreds of billions of dollars in reserves and sovereign wealth funds that support it. For decades, the Gulf states and Washington have operated on an implicit bargain: U.S. protection in exchange for Gulf oil priced in dollars, and the recycling of those “petrodollars” into U.S. stocks, bonds, arms, and technology. Saudi Arabia, the United Arab Emirates, Qatar, Oman, and Bahrain all peg their currencies to the dollar, requiring large supporting reserves of roughly $800 billion. At the same time, sovereign wealth funds from the Gulf Cooperation Council manage more than six trillion dollars globally, heavily invested in U.S.-linked assets, while Saudi and UAE funds alone hold nearly 250 billion dollars in U.S. Treasury securities. This system has been central to the dollar’s status as the world’s reserve currency and to U.S.-Saudi relations since the 1970s.
Pillars of the Petrodollar Under Strain
The petrodollar rests on three pillars: U.S. demand for oil, oil priced in dollars, and the Gulf’s reliance on U.S. security. Each of these pillars is now under strain. America’s position as a net energy exporter has reduced its reliance on Middle Eastern oil. Dollar pricing of oil was already under pressure before the war, as countries including China, Russia, and Iran experimented with non-dollar energy trade. https://moderndiplomacy.eu/2026/03/25/gulf-war-tests-the-foundations-of-the-petrodollar/
How the Iranian war may lead to the last days of the petrodollar
March 25, 2026
Accumulating dollars to pay for energy has underpinned the U.S. currency for decades
Oil exporting nations have typically recycled their petrodollars into U.S. Treasurys
One unintended consequence of the Middle East conflict may be the end of what is called the petrodollar regime.
The world saves in dollars largely because it pays for its energy in dollars. If the disruption caused by the effective closure of the Strait of Hormuz leads to major economies trading oil in other currencies then this could seriously undermine the dollar’s hegemony in central bank reserves and global trade.
This warning was sounded by Deutsche Bank strategist, Mallika Sachdeva in a special report published Tuesday, subtitled “the perfect storm for the petrodollar.” …
Oil is quoted in dollars, invoiced in dollars and settled in dollars, Sachdeva points out, and this practice dates back to an agreement struck between the U.S. and the Saudis back in 1974. The Desert Kingdom agreed to invest its trade surpluses in dollar assets in return for U.S. security guarantees, she writes, and those assets were generally U.S. Treasurys.
The dominance of the dollar in cross-border trade has a lot to do with the petrodollar.
As energy exporters accumulated dollar reserves, this allowed the U.S. to borrow extensively and cheaply, what former French president Valery Giscard d’Estaing called its “exorbitant privilege.”
However, Sachdeva contends, the world is changing and most of the oil produced in the Middle East is sold to Asia, not America, which is now a net exporter itself. Sanctioned Iranian and Russian oil (producing between them roughly 13 million barrels of crude daily, around 14% of global consumption) has been trading “off the dollar rails,” as Sachdeva puts it, for some time. The Saudis have been experimenting, she observes, with forms of non-dollar payment such as the Project mBridge infrastructure, using a central bank digital currency.
There were already signs of instability to petrodollar foundations: Saudi Arabia sells four times as much oil to China now as to the U.S.
Sachdeva is concerned that the regional escalation of the Gulf conflict may end up challenging assumptions about the security umbrella the U.S. provides, and may oblige some of these countries to unwind their savings in foreign assets. https://www.morningstar.com/news/marketwatch/2026032530/how-the-iranian-war-may-lead-to-the-last-days-of-the-petrodollar
The US dollar has been in the process of losing important part of its international backing for the past several years (e.g. The End Of The Petrodollar Is The End Of America’s Global Dominance? Saudi Arabia Ends Petrodollar Deal With US? US Dollar is ‘Toxic’?), and the Iran war is another push.
What is the petrodollar?
Essentially, it is the fact that although the US dollar is no longer backed by gold, since most oil is priced in US dollars, that gives the US dollar a backing through a needed commodity. This insures that, internationally, the US dollar will have value. So it is sometimes called a petrodollar.
Here is more about that:
After the collapse of the Bretton Woods gold standard in the early 1970s, the U.S. struck a deal with Saudi Arabia to standardize oil prices in dollar terms. Through this deal, the petrodollar system was born, along with a paradigm shift away from pegged exchanged rates and gold-backed currencies to non-backed, floating rate regimes.
The petrodollar system elevated the U.S. dollar to the world’s reserve currency and through this status, the U.S. is able to enjoy persistent trade deficits, and become a global economic hegemony. The petrodollar system also provides the United States’ financial markets with a source of liquidity and foreign capital inflows through petrodollar “recycling.” However, before the effects of the petrodollars on the U.S. dollar can be examined, a brief history lesson is in order. …
Since the most sought after commodity in the world–oil–is priced in U.S. dollars, the petrodollar helped elevated the greenback as the world’s dominant currency. In fact, according to the Bank for International Settlements (BIS) triennial survey, 87 percent of all foreign exchanges deals initiated in April 2013, involved the USD on one side. With this status, the U.S. dollar was able to enjoy, what some have asserted to be an “exorbitant privilege” of perpetually financing its current account deficit by issuing dollar denominated assets at very low rates of interest, as well as, becoming a global economic hegemony.
For instance, countries like China, who hold vast quantities of U.S. debt have voiced their concerns in the past about the possible dilutive effects to their asset holdings should the dollar depreciate. However, the privileges associated with being able to run persistent current account deficits come at a price. As the reserve currency, the U.S. is obligated to run these deficits to fulfill reserve requirements in an ever in an ever-expanding global economy. If the United States were to stop running these deficits, the resulting shortage of liquidity can pull the world into an economic contraction. However, if the persistent deficits continued ad infinitum, eventually foreign countries will begin to doubt the valuation of the dollar and the greenback may lose its role as the reserve currency; this is known as the Triffin Dilemma. http://www.investopedia.com/articles/forex/072915/how-petrodollars-affect-us-dollar.asp#ixzz4iqqtZ9CU accessed 06/02/17
If enough oil producing nations stop pricing oil in US dollars, the theory is that the US dollar will drop, or even collapse.
What most Americans do not realize is that the largest export from the USA is actually its currency–which is basically debt notes.
Here is something from my free online book Lost Tribes and Prophecies: What will happen to Australia, the British Isles, Canada, Europe, New Zealand and the United States of America?:
The Bible warns about silver becoming “dross” (Isaiah 1:22; Ezekiel 22:18-22) and says to reverse it once it happens (Proverbs 25:4a; Isaiah 1:25). But the Anglo-American nations have not done that, their old silver coins are now dross (made/filled with cheaper materials) and their massive debts have made dross out of their fiat currencies (currencies that are not tied to gold or some other hard asset).
Furthermore, the “U.S. is highly vulnerable to loss of confidence by foreign creditors.”[i] U.S. government debt is “extremely vulnerable to foreign attack because of the high percentage of foreign ownership — almost 40% of the market.”[ii]
Interestingly, in the past, one foreign creditor, China, has raised concerns about the U.S. debt that are so serious, that its potential dumping of that debt has been called China’s “nuclear option”[iii] against the U.S.A.—an option that involves no military intervention, but that could greatly harm the U.S.A.
Many have complained about the U.S.A. “weaponizing” its dollar through sanctions, bank restrictions, and other means.[iv] By doing so, the U.S.A. has inadvertently been building up a coalition to push aside the dollar—and this will happen when the timing is considered to be better. European leaders have been working for years to establish a new reserve currency for the world, partially with the intent to remove the U.S. dollar from its position as the world’s primary reserve currency. The fact that Europe would develop its own currency, as well as for that purpose, was predicted by Church of God writers no later than 1971[v] –which is over two decades before the euro was officially agreed to.
Those in Iran and some of the Arab lands, along with nations such as Brazil, China, and India have discussed plans for the removal of the dominance of the U.S.A. in global trade as well. The former (again current) President of Brazil, Luiz Inácio Lula da Silva, even claimed that eliminating the U.S. dollar’s reserve currency status was one of the reasons that the BRICS alliance (Brazil, Russia, India, China, and South Africa) was formed in the first place. [vi] Others have noted that bypassing the USA dollar is still an object of BRICS—and officially BRICS nations “are currently working on setting up a new global reserve currency,”[vii] which may have gold-backing.[viii] The expansion of BRICS (which is in progress) may ultimately even hurt Australian trade as well as “severely weaken primacy of the US Dollar as an international currency.”[ix]
The Bible clearly warns against cheapening the money supply and encourages having money hold its value (Proverbs 25:4 Isaiah 1:25, Ezekiel 22:18-22). Debt is also warned against (Habakkuk 2:6-8). Yet policies enacted under the Obama, Trump, and Biden Administrations, following certain other administrations, have ignored these warnings.
Destruction is coming.[i] Rickards J. Axis of Gold. The Daily Reckoning, December 20, 2016
[ii] Ibid
[iii] Gertz B, China Debt Threat. Washington Times, March 2, 2011
[iv] Jayakumar V. The weaponization of finance threatens the future of the dollar standard. The Hill, March 1, 2022
[v] Hogberg G. Rising World Colossus. Plain Truth magazine, May 1971
[vi] Escobar P. BRICS was created as a tool of attack: Lula. Asia Times, August 28, 2019
[vii] BRICS developing new global reserve currency – Putin. RT, June 22, 2022
[viii] Helms K. Economists Discuss Russia, China Potentially Developing Gold-Backed Currency. BRICS Information Portal, November 11, 2022
[ix] Hunter M. BRICS Is Becoming The Big Kid On The Block: Implications For Australia – Analysis. Eurasia Review, November 1, 2022
As far as the BRICS alliance of nations goes, Brazil, Russia, Saudi Arabia, Iran, and the United Arab Emirates are major oil exporters and China and India are major oil importers. Hence their efforts, combined with Saudi Arabia’s non-exclusive dollar oil sales, look to be factors to help topple the USA dollars reserve currency status. Perhaps, it should also be noted that all of those nations also highly value gold and continue to build their gold reserves, partially because of their desire to not rely on USA dollars.
The USA will have MASSIVE inflation and the economy will never fully recover as creditors will rise up and eliminate the USA per Habakkuk 2:6-8.
Someone said this could happen as early as 2015:
Market Collapse then New World Order in 2015? A long-time financial adviser named Harvey Organ claims that claims that because of insufficient gold in the central banks of USA and UK, that Shanghai would bring about exposing this and that this would lead to a massive, overnight, rise in the price of gold and silver, diminished value of their currencies. He states a market collapse will occur before the end of 2014, that the petroyuan will replace the petrodollar, and that a Chinese led New World Order will be in place for 2015. Is this possible? Where does the leader of the ‘New World Order’ come from? What does the Bible teach? This is a video.
Although I did not believe such a collapse could have happened in 2015 (nor do I believe such for 2026), the reality is that the Bible tells of a time when the US will be taken over (Daniel 11:39) and its massive debts will be a reason that many will be opposed to it (cf. Habakkuk 2:2-8).
The existence of the ‘petrodollar’ seems to have helped the USA be in a position to increase its debt and that will not end well (cf. Habakkuk 2:2-8; Daniel 11:39; see also USA in Prophecy: The Strongest Fortresses).
As far as Saudi Arabia goes, while it considers itself a US ally (and still feels the need for US military protection), one day it will further break its ties with the US (cf. Psalm 83:2-8; see also Is the Future King of the South Rising Up?).
Some items of possibly related interest may include:
The End of US Dollar Dominance Is the USA losing its economic status? What about the petro-gold-yuan? A related video is also available: US Dollar being challenged by Gold-Petro-Yuan.
HABAKKUK Here is a link to the article Commentary on Habakkuk and the End of the United States. God gave Habakkuk a message on living by faith. Did God give a prophecy concerning debt and the destruction of the United States? This article covers the entire Book of Habakkuk. Here is a link to a related sermon: Habakkuk: Faith, USA’s End, & Jesus’ Return.
The Plain Truth About Gold in Prophecy. How Should a Christian View Gold? What do economists and the Bible teach about gold? Gold and silver may drop in value. Inflation/deflation? What do Christians need to know about gold and silver? Two videos of related interest may be: Germany, Gold, and the US Dollar and Silver, Science, and Scripture.
Europa, the Beast, and Revelation Where did Europe get its name? What might Europe have to do with the Book of Revelation? What about “the Beast”? Is an emerging European power “the daughter of Babylon”? What is ahead for Europe? Here is are links to related videos: European history and the Bible, Europe In Prophecy, The End of European Babylon, and Can You Prove that the Beast to Come is European?
USA in Prophecy: The Strongest Fortresses Can you point to scriptures, like Daniel 11:39, that point to the USA in the 21st century? This article does. Two related sermon are available: Identifying the USA and its Destruction in Prophecy and Do these 7 prophesies point to the end of the USA?
Who is the King of the West? Why is there no Final End-Time King of the West in Bible Prophecy? Is the United States the King of the West? Here is a version in the Spanish language: ¿Quién es el Rey del Occidente? ¿Por qué no hay un Rey del Occidente en la profecía del tiempo del fin? A related sermon is also available: The Bible, the USA, and the King of the West.
Could God Have a 6,000 Year Plan? What Year Does the 6,000 Years End? Was a 6000 year time allowed for humans to rule followed by a literal thousand year reign of Christ on Earth taught by the early Christians? Does God have 7,000 year plan? What year may the six thousand years of human rule end? When will Jesus return? 2033 or 2035 or? There is also a video titled: When Does the 6000 Years End? 2031? 2035? Here is a link to the article in Spanish: ¿Tiene Dios un plan de 6,000 años?
Lost Tribes and Prophecies: What will happen to Australia, the British Isles, Canada, Europe, New Zealand and the United States of America? Where did those people come from? Can you totally rely on DNA? What about other peoples? Do you really know what will happen to Europe and the English-speaking peoples? What about Africa, Asia, South America, and the Islands? This free online book provides scriptural, scientific, historical references, and commentary to address those matters. Here are links to related sermons: Lost tribes, the Bible, and DNA; Lost tribes, prophecies, and identifications; 11 Tribes, 144,000, and Multitudes; Israel, Jeremiah, Tea Tephi, and British Royalty; Gentile European Beast; Royal Succession, Samaria, and Prophecies; Asia, Islands, Latin America, Africa, and Armageddon; When Will the End of the Age Come?; Rise of the Prophesied King of the North; Christian Persecution from the Beast; WWIII and the Coming New World Order; and Woes, WWIV, and the Good News of the Kingdom of God.