The petrodollar was started by the United States in an agreement with Saudi Arabia in the 1970s with the intent of standardizing oil sales and purchases in U.S. dollars.

What happens if we lose the petrodollar?

The petrodollar is any U.S. dollar paid to oil-exporting countries in exchange for oil. ... That makes their national income dependent on the dollar's value. If it falls, so does their government's revenue. As a result, most of these oil exporters also peg their currencies to the dollar.

Is U.S. dollar backed by oil?

The U.S. dollar is, for all intents and purposes, backed by oil. It's been that way by design since the 1970s, when the United States worked with OPEC to ensure a steady flow of oil to the country. ... This dollar-first policy has been the cornerstone of American foreign policy since Vietnam.