The Iran war just broke the petrodollar

The petrodollar system underpinning U.S
financial dominance is breaking down as the Iran war disrupts both oil revenues and foreign demand for Treasurys, exposing limits to their safe-haven status
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The virtuous loop that has seen America underwrite stability in the Middle East in exchange for Gulf states recycling their dollar revenues into U.S
Treasurys has been broken.The understanding traces back to 1974, when Henry Kissinger struck one of the most consequential financial deals in modern history
Saudi Arabia would price its oil in dollars and park the surpluses in U.S
In exchange, America provided security guarantees and a stable global order.The arrangement was elegant in its circularity: Oil consumers paid dollars for energy, those dollars flowed to Riyadh and Abu Dhabi and from there back into Washington’s debt
For 50 years, this petrodollar loop quietly subsidized American borrowing costs and cemented the greenback’s role as the world’s reserve currency.

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