In the 1980s after the arab crisis OPEC tripled the price of oil. At that time America recognized themselves vulnerable because they exported 70% of all the oil they consumed. The President of the US at that time was Richard Nixon. He sent his Secretary of state Henry Kissinger to Saudi Arabia to secure a reliable foreign source of oil. A pact was signed between Saudi Arabia and America which said America would protect Saudi Arabia and make sure the house of Sa'ad would stay in power if Saudi sold petroleum in US dollars. Subsequently all the other OPEC nations accepted the US dollars as the default medium for purchasing oil. This created a global demand for the US dollars. As these dollars were circulating outside the US it was given another name - the petrodollar
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