Francis Tuchek, Kaoshiung
As more nations conduct oil transactions outside the traditional petrodollar system, the erosion of dollar demand is weakening U.S. Treasury bonds and prompting Trump’s geopolitical maneuvers aimed at securing energy resources. Venezuela’s vast oil reserves, they suggest, have become a focal point in this struggle to preserve the dollar’s role at the center of global trade.
Since the 1970s, oil has been priced and traded almost exclusively in dollars, ensuring steady global demand for the currency and for U.S. debt securities. But recent years have seen a growing number of exceptions. China and Russia have settled oil trades in yuan and rubles, Saudi Arabia has accepted yuan for sales to Beijing, and India has purchased Russian crude using rupees. These moves, while incremental, signal a broader trend of diversification away from dollar-denominated energy trade.
Foreign governments and corporations historically recycled petrodollars into U.S. Treasuries, helping finance America’s deficits at low cost. As oil trades shift to other currencies, that recycling mechanism weakens. Data shows foreign holdings of Treasuries have declined year-on-year, raising concerns about reduced demand and higher borrowing costs for Washington. Economists caution that if this trend accelerates, it could reach a tipping point where the dollar’s reserve status is undermined, potentially triggering systemic instability.
Some observers argue that U.S. foreign policy has been shaped by efforts to counteract this erosion. Venezuela’s oil wealth has been cited by commentators as a potential lever in maintaining dollar dominance in energy markets. Similarly, Greenland’s strategic mineral wealth has been interpreted as part of a broader resource strategy. While such interpretations remain speculative, they highlight the perceived link between economic power and geopolitical maneuvering.
The dollar remains the world’s leading reserve currency, but its dominance is no longer unquestioned. As more nations experiment with alternative settlement systems, the U.S. faces growing pressure to adapt. Whether the petrodollar’s decline marks a gradual adjustment or a sudden rupture could determine the stability of the global financial system in the years ahead.
