What is a petrodollar?

A petrodollar is a dollar earned by a country with the sale of its oil to another country.

The term Petrodollar was first used in 1973 by Ibrahim Oweis, professor of economics at Georgetown University.

All OPEC (Organization of Petroleum Exporting Countries) sell crude in US dollars (USD), so that any country that wants to buy oil to these countries has to change its national currency to USD.The term petrodollar should not be confused with petrocurrency, which refers to the national currency of each oil-exporting country like Canada (CAD) for example.

The demand for US dollars for other countries to buy oil significantly affects the United States emphasizing the deficit and inflation. In this sense, most economists agree that trade in oil is in the long term, a charge for the currency in which the trade is conducted.


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