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First rupee payment for oil to UAE: India looks for more deals, but finds no targets
(www.thehindu.com)
this post was submitted on 25 Dec 2023
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A BRICS currency has never been more important than it is now. The foundation of the USD as a reserve currency is based on its usage in the trade of oil. With Saudi Arabia, UAE, and Iran (oil producers) and Egypt (controlling the Suez) joining BRICS, there's a real threat to US currency dominance.
If the euro doesn't really threaten US as a reserve currency, a BRICS one certainly won't. As economies diversify and become more intersectional, as has happened since ww2, the currency fluctuations are less, with increased trade. Then currency used matters less and risk is lower for both sides when non us currency is used. So, I think dollar as a currency reserve will naturally reduce over time but it's not disappearing any time soon.
Can't buy oil with the euro.
You can, or could, in Venezuela and Iran. Europe trades in oil all the time, but the petrodollar reigns supreme for international trade with oil producing nations. That's not in question. The point is how much that will impact on international trade relations, now and in the future.
As currencies diversify, as power needs diversify and as stability and increased trade between all nations increases, the majority of trade may still remain in dollars, but that provides less power for America than historically. Oil is less important and the traded currency is also less important. This also improves with improved digital process of payments and faster shipping routes. It's assumed that is part of the reason Russia values the arctic, for shipping routes.
There may be limited appetite for more ruoee trades now, but a trial balloon is always the first step and there may be more on an ad hoc basis. India may start to trade with Iran or Russia in increasing volume but wish to have rupee trade. A large customer like that may find that one supplier plays ball.