Originally Posted by
Bluesteal
Now for the first time, this 1973 Petro-dollar agreement may be broken as the Saudi's would accept Yuan. Other countries would follow and buy Yuan instead of dollars to buy that Oil from Saudi's and other OPEC countries. Now, what do you think would happen to the dollar as it would no longer be needed to purchase Oil??? Thats the Petro-dollar bud, dont get it confused with the FED. Its just a transaction to buy Oil.
They'll let China pay in Yuan, but the oil is still priced in dollars and the amount of Yuan they pay is still going to be based on the current exchange rate of RMB to USD, right? I'd guess China is trying to pay in RMB because the exchange rate right now is below 7:1, which is low for RMB:USD.
I agree, the petro-dollar has been great for proliferation and strength of USD. I don't think this development will bring about the overnight collapse of USD. The price has to be standardized on something concrete, regardless of what the country is paying with.
Longer term effect is like trying to forecast the weather next year.