Petrodollar

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A petrodollar is a United States dollar earned by a country through the sale of its petroleum (oil) to another country.[1] The term was coined in 1973 by Georgetown University economics professor, Ibrahim Oweiss, who recognized the need for a term that could describe the dollar received by petroleum exporting countries (OPEC) in exchange for oil.

The term petrodollar should not be confused with petrocurrency which refers to the actual national currency of each petroleum exporting country.

In addition to the United States petrodollar, a petrodollar can also refer to the Canadian dollar in transactions that involve the sale of Canadian oil to other nations.

Large inflow of petrodollar in a country often has an impact on the value of its currency. For Canada it was shown that an increase of 10% in the price of oil increases the Canadian dollar value versus the US dollar by 3%[2] and vice versa.

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Further reading[edit]

  1. The hidden hand of American hegemony : petrodollar recycling and international markets / David E. Spiro. Ithaca, NY : Cornell University Press, 1999. xiv, 177 p. ; 25 cm. LOC call
  2. “The Choice of Currency for the Denomination of the Oil Bill," Speech given by Javad Yarjani, Head of OPEC's Petroleum Market Analysis Dept, on The International Role of the Euro (Invited by the Spanish Minister of Economic Affairs during Spain's Presidency of the EU) (April 14, 2002, Oviedo, Spain) [1]
  3. “Russia shifts to euro as foreign currency reserves soar,” AFP, June 9, 2003 [2]

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