The US dollar will continue to be used for oil sales, contrary to false online claims

Is Saudi Arabia abandoning the U.S. dollar for its oil sales?

A June 13 X post that purported to show "breaking news" claimed just that: "Saudi Arabia will stop using the US dollar for oil sales and will not renew the 50-year petro-dollar agreement with the U.S." 

That post from the blue-checkmark account Globe Eye News gained more than 1.5 million views and 29,000 likes as of June 18 — but a user-submitted community note was eventually appended, rebutting the post’s claims. 

Globe Eye News’ X account links to an Instagram account by the same name. The accounts’ posts do not link to reputable news stories.

One verified Facebook user shared a screenshot of the tweet, asking, "Is this true?" 

The post was flagged as part of Meta’s efforts to combat false news and misinformation on its News Feed. (Read more about our partnership with Meta, which owns Facebook and Instagram.)

To answer the Facebook user’s question: No, it’s not true. Global oil market experts told PolitiFact they knew of no evidence that Saudi Arabia intended to stop using the U.S. dollar for oil sales. 

(Screenshot from Facebook.)

Patrick De Haan, the head of petroleum analysis at GasBuddy, a website that tracks gasoline prices, said there is "absolutely no credible proof" that Saudi Arabia plans to stop using the U.S. dollar for oil sales.

The U.S. dollar has been the preferred oil trading currency because of its "global use and stability," though geopolitical shifts mean some sales happen using other currencies, De Haan said. 

Mark Finley, an energy and global oil fellow at Rice University’s Baker Institute for Public Policy, said the U.S. economy is a smaller share of the global economy than it was 50 years ago and that Saudi Arabia has recently worked to diversify its geopolitical alliances, including increasing its ties to Russia and China.

"There is always interest among America’s competitors to challenge the dollar’s dominance in international finance," he said. "Countries like China and Russia want to develop alternatives to the dollar, both to enhance their own interests and to reduce U.S. influence and leverage." 

However, because modern currency markets are large and actively traded, international companies can complete transactions in dozens of currencies with minimal cost, Finley said.

The post also claimed that Saudi Arabia would allow a 50-year-old "petrodollar" agreement to expire. Experts told PolitiFact they knew of no such U.S.-Saudi Arabian agreement.

David Wight, a visiting assistant history professor at the University of North Carolina, Greensboro, described petrodollars, simply, as dollars "exchanged for the purchase of oil."

"There was no formal agreement between the U.S. and Saudi governments that Saudi oil was contractually required to be sold in U.S. dollars," Wight said. He authored "Oil Money: Middle East Petrodollars and the Transformation of US Empire, 1967-1988." 

Featured Fact-check

Threads posts

stated on November 13, 2024 in a Threads post

Nissan just announced 9,000 layoffs in Tennessee “to avoid severe losses due to expected tariffs.”

"When the Saudi oil industry began, it was operated by U.S. companies, so they dealt in U.S. dollars," Wight said. "Even after Saudi Arabia bought out the U.S. companies over the course of the 1970s, they continued to sell oil for dollars."

Finley said that after oil shocks in the 1970s, the U.S. government "was keen for Saudi Arabia to spend its oil windfalls on U.S. companies," to keep using U.S. financial institutions as their international bankers and to view the U.S. as its key ally. 

Also, broad global economic structures encouraged Saudi Arabia to use U.S. currency because "dollars have served as the de facto global currency since World War II," Wight said.

The closest thing to a 50-year-old U.S.-Saudi Arabia agreement we could find was a Joint Commission on Economic Cooperation. The commission, established in 1974, encouraged stronger political ties between the countries and supported industrialization in Saudi Arabia — especially when it meant Saudi Arabia would "recycle petrodollars," or reinvest dollars from its oil sales in American goods, services and assets. 

It seems unlikely Saudi Arabia will cast aside the practice of selling oil for U.S. dollars anytime soon.

"Selling oil in dollars is not fundamentally what makes the dollar powerful in global trade," Wight said. "The power of the dollar in global trade is why most oil is sold for dollars."

A Facebook post said, "Saudi Arabia will stop using the US dollar for oil sales and will not renew the 50-year petro-dollar agreement with the U.S."

Global oil market experts said they knew of no evidence that Saudi Arabia intended to stop using the U.S. dollar for oil sales. Geopolitical shifts mean that more oil sales are happening using other currencies, but the U.S. and Saudi Arabia have a long history of economic and political cooperation, and sales of oil in U.S. dollars are expected to continue. 

We rate this claim False.

PolitiFact Researcher Caryn Baird contributed to this report.