Saudi Arabia Ends Oil Deal with US: What It Means for Gold and Global Economy?
Published by Raghav Goel | WealthCare Vest
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🛢️ The End of the 1974 Oil Deal Between Saudi Arabia and the US
In June 2025, a historic economic agreement came to an end. Saudi Arabia did not renew its 50-year-old oil deal with the United States — a deal that once changed the global economy.
Back in 1974, the US and Saudi Arabia had a simple but powerful agreement:
"All Saudi oil sales will be done in US Dollars."
This created what we now call the Petrodollar system.
💵 What Was the Petrodollar System?
Petrodollar means US dollars earned by countries through the sale of oil. Because of the 1974 deal, almost all countries had to buy oil using US dollars, even if they weren’t American. This created huge demand for the US dollar, increasing its value and influence globally.
📌 Example:
If India wanted to buy oil from Saudi Arabia, it had to convert rupees to dollars and then buy oil.
💰 What Happens Now?
Now that the deal is over, Saudi Arabia can choose to:
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Sell oil in any currency – like Chinese Yuan, Euro, or even Indian Rupees
-
Trade oil for gold or other commodities
This shift can lead to de-dollarization, meaning less dependence on the US dollar.
🪙 Why Gold Prices May Increase
If oil-rich nations start accepting gold in exchange for oil, gold demand will shoot up. This can increase gold prices over time.
Think of it like this:
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Earlier: Oil = US Dollar
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Now: Oil = Multiple currencies or Gold
💡 Gold could become a universal medium of trade — like it was centuries ago.
📈 How This Affects You?
Here’s what the average Indian investor or saver should know:
| Impact Area | What It Means |
|---|---|
| 🪙 Gold Investment | Gold prices may rise over time |
| 💵 Dollar Value | May decline if demand falls globally |
| 🛢️ Oil Prices | Could fluctuate depending on new trade deals |
| 📉 Inflation Risk | Currency weakening may cause local inflation |
🔁 How to Prepare as an Investor?
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Diversify your portfolio – include gold, mutual funds, and SIPs
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Watch international developments closely
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Do not panic – these are long-term macro shifts
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📌 Final Thought
We are witnessing a geopolitical shift in real-time. The end of the US-Saudi oil agreement marks the beginning of a new global trade era. Whether it’s the rise of gold or the fall of the dollar, your financial awareness is your biggest asset.
📢 Disclaimer
This blog is based on personal research and is meant for educational and awareness purposes only. It is not financial advice. Please consult your financial advisor before making any investment decisions.
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