The petrodollar system takes shape (1974)
After the 1973 oil shock, the United States and Saudi Arabia reached an understanding that Saudi oil would be priced and sold in dollars. Other producers followed. This tied global oil trade to the dollar and pushed exporters to hold dollar reserves.
Oil buyers everywhere needed dollars, which lifted demand for the currency and for US assets.
For fifty years, pricing oil in dollars helped keep the dollar at the center of world trade and gave US sanctions long reach.
Libya's move is a small chip at that arrangement: an oil exporter setting up a way to trade without the dollar in the middle.
