Rumor has it Bitcoin is the new oil… and if your wondering what that means with the incoming administration… here is the history of the creation of the petrodollar in1973. It was part of a broader agreement between the United States and Saudi Arabia, whereby Saudi Arabia agreed to price its oil sales exclusively in U.S. dollars in exchange for military protection and economic benefits. This system linked the dollar to global oil trade, significantly reinforcing its status as the world’s reserve currency.

Oil Prices Before 1973

•Pre-1973: Oil prices were relatively stable, as oil was mostly priced under the agreements of the Seven Sisters (major oil companies). From 1948 to 1972, oil prices hovered around $2.50–$3.00 per barrel in nominal terms.

•Adjusted for inflation, this was roughly equivalent to $15–$20 per barrel in today’s terms.

Oil Prices After 1973

•Post-1973 Oil Crisis: After the creation of the petrodollar and the 1973 Arab Oil Embargo, oil prices surged. By the end of 1974, oil prices had increased by nearly 400%, rising to $11 per barrel (about $65 per barrel in today’s terms).

•This marked the end of the era of cheap oil and the beginning of more volatile oil prices, heavily influenced by geopolitics.

The 1973 oil shock underscored the importance of Middle Eastern oil producers in global markets, and the petrodollar system ensured that the U.S. would continue to benefit economically from global oil trade.