WHAT DOES THE TERM PETRODOLLAR MEAN?
In 1973, Nixon struck a deal with Saudi Arabia, (without consulting with the members of the Bretton Wood agreement, nor his own state department) that every barrel of oil purchased from the Saudis would be in U.S. dollars. Under this new arrangement, any country that wanted to purchase oil from Saudi Arabia would be required to first exchange their own national currency for U.S. dollars. In exchange for Saudi Arabia's cooperation to change their oil sales exclusively in U.S. dollars, the United States offered weapons and protection of their oil fields from neighboring nations, including Israel. In 1975 every GCC (Golf Cooperation Council) member- Bahrain, Kuwait, Oman, Qatar, the United Arab Emirates (UAE) and Saudi Arabia supported oil pricing in dollars assuring the strength of the United States dollar post Bretton-Wood era