This will come as a surprise to a lot of Bitcoiners... apparently, the petrodollar y'alls love to harp about isn't a thing.

I'm inclined to agree with Mr. Greeley: Mandating, via law and ultimately force or custom, that someone ought to pay for some portion of their trade in a certain currency doesn't elevate this currency to supreme dominance. Yes, it means at any given time some international oil players and countries hold larger dollar deposits than they otherwise would, so yes, there's some purchasing-power relevant seigniorage and entrenchment of a payment system.

But nobody forces you to _keep holding, saving, investing, and rolling assets_ in a certain money. We have exchanges, the market floodgates are wide open.

Put differently, just because you have to "pay" in euros when you go to the crumbling Fort Europa, there's no added financial/monetary power to the museum old world for the ~three seconds-to-30-days it takes Visa to clear the dollar->euro transaction behind the scenes.
Just because you're paid in dollars/euros/British or Venezuelan shitcoins doesn't mean you have to hold those currencies as savings or precautionary spending/money demand going forward.

But “What will the Arabs do with their money?”But “What will the Arabs do with their money?”

The Yom Kippur war in October and the embargo that followed drove the price of oil above $10 a barrel by early the next year. We now mark the embargo as the beginning of what we call the petrodollar. At first, the word “petrodollar” just referred to a flood of capital from oil sales. Many countries with oil reserves did not have domestic economies big enough to invest in, and so petrodollars sloshed around the global economy looking for a return. They were seen as destabilising, and potentially destructive.
The Saudis would price their oil in dollars and sink their dollar profits into US Treasuries. In return, the Americans would guarantee security and stability. The US dollar would float on top of the US Navy.

There are, monetarily speaking, two components to that deal; it's the sinking dollar profits into Treasuries that's the important part (and the insufficient domestic financial system), not the pricing of oil.

The US looks incapable of winning, ending or even articulating the purpose of its war on Iran. Oil production has dropped in Saudi Arabia, and collapsed in Kuwait, Iraq and the UAE. Iran sells almost all its oil to China, receiving not dollars, but yuan. India may now be buying Iranian oil in yuan as well. This month, the ships that did pass through the Strait of Hormuz paid a toll to Iran in bitcoin.

Side-note: I have not seen any txids on that; still highly doubt ANYBODY paid Iranians in bitcoin, but it's a nice talking point... and if they did, do we have a petrobitcoin now?!

"There are several different stories we tell ourselves about why the dollar is so powerful. Most of them start with the assumption of monetary sovereignty. If a state is powerful, so is its money.""There are several different stories we tell ourselves about why the dollar is so powerful. Most of them start with the assumption of monetary sovereignty. If a state is powerful, so is its money."

The economist Robert Mundell wrote that strong currencies were the children of empires, with vast, stable domestic markets, attached to far-reaching merchants. The idea of the petrodollar nestles into this story of currency and empire — the US projects power and stability, and those who enjoy that stability consent to the dollar.

the reports of the dollar's demise have been greatly exaggerated:

one of the most powerful things about the dollar is precisely the way the US federal government has relinquished control of it. Banks all over the world create their own dollars, on their own balance sheets, with the tacit acceptance of the Fed and the US federal government but beyond their regulatory reach.

Banks outside the US mark up their own ledgers with dollar-denominated loans, building a vast pool of deposit dollars that keep dollar trade and finance liquid. If we assume that a currency can only be sovereign, produced by a country within its own borders, then these dollars are hard to see.

We talked about this recently re: Nik Bhatia's BPI paper on statecraft (#1476043)

It is this flexibility that has made the dollar a global project for the past half century. The petrodollar story gets cause and effect exactly backwards. Oil producers priced barrels and profits in dollars in the 1970s because an infrastructure of global dollar banking, what we now call the eurodollar system, was already in place — not in New York, but in London.

Bhatia knows this well, elaborated on it at length in Bitcoin Age (#910275)

"The global dollar does not rest on ships and petrodollars. It rests on bankers and eurodollars.""The global dollar does not rest on ships and petrodollars. It rests on bankers and eurodollars."

In the 1950s, banks in the UK began trading access to deposits in America. European companies, flush with dollar deposits in American banks, simply sold them into a liquid market in London. It was a triumph of practice over theory. Paul Einzig, a regular contributor to the FT, described eurodollars as a “remarkable conspiracy of silence”. Bankers in the City begged him not to write about what they were doing, lest someone important notice.
In 1969 Milton Friedman published some basic arithmetic showing that the size of the market for dollars in the City was just too vast. There couldn’t just be claims on existing American bank dollars in London. There had to be new dollars as well.

HERE we go with the relevant, important change in the dollar's global nature (what Bitcoiners really refer to when they say "petrodollar"):

Eurodollars were convenient for policymakers in the US, because they delayed the return of American bank deposits to Fort Knox. And they were convenient for policymakers in Europe, because they kept profits booked in America from causing inflation at home. It was already clear what eurodollars were good for: mopping up wealth.

TL; DR on this eurodollar primer?TL; DR on this eurodollar primer?

The global dollar system was not set in motion by a single diplomatic coup — oil for dollars. It was invented quietly by private actors, then endorsed and protected by the US. America didn’t just push its dollar out into the world. It found dollars in London, then decided to protect them.

https://archive.md/Ww4Ct