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The global energy market uses the U.S. dollar for pricing and settling transactions since the 70s - the "petrodollar" system. If they EU push hard for it, they
by TaurenHunter 1y ago
The global energy market uses the U.S. dollar for pricing and settling transactions since the 70s - the "petrodollar" system.
If they EU push hard for it, they may get someone like Norway to accept Euros.
However, there are energy contracts locked into dollar-based pricing and many exporters need dollars because they hold dollar-based debt, buy goods in dollars or have a currency peg.
For them to accept the relatively unappealing Euros they might ask for a premium to offset conversion costs or risks.
- triceratops 1y agoBut now everyone has the same problem getting dollars because everyone's got tariffs. The EU and their non-American suppliers. If said suppliers need dollars to pay back dollar-based debts, and those debtors aren't in the US, then they are also tariffed. Maybe they're all open to re-denominating debts and contracts in a currency that is easier to obtain and spend.
- TaurenHunter 1y agoSure, there is a greater incentive now to depart the dollar system. But that would be a monumental shift and the path to that goal is a nightmare with all kinds of challenges. Rewiring the entire system would take a decade or more.