Can Iraqi oil be sold in currencies other than the dollar?
Ziad Al-Hashimi, an economist, offered insight on the realities of requests to sell oil in currencies other than the US dollar.
“There are emotional parliamentary and non-parliamentary demands demanding that the Iraqi government sell oil in currencies other than the dollar,” Al-Hashemi stated in a post on the “X” platform that was then followed by “Jarida.”
The economic expert clarifies, “Theoretically, Iraq and other countries can sell their oil exports in any currency other than the dollar.” in reference to the rationale and viability of these requests. Although the state is allowed to make this option as a sovereign, oil is a political and economic weapon that directly affects the world economy. Dealing with oil as an export good requires extreme caution and awareness since everything associated with it has global economic and even political implications.
“There is a strong connection between a barrel of oil and the US dollar, which after 1973 was determined by what is called the petrodollar,” he continued. “Any violation of this rule will incur very large losses to Iraq, which will go to exchange rate differences between the dollar and the rest of the currencies.” The dollar is the currency used for global oil pricing.
Al-Hashimi declared, “In order to maintain their interests and strategic ties with the United States, the oil-producing nations only sell their oil in dollars. Iraq describes itself as a friend and even an ally of the United States, and its government has no desire to open a confrontation front with the Americans. As a result, selling oil for any currency other than the dollar is seen as a challenge to or preparation for entering into a conflict or state of war with the United States.
“Approximately 60% of the volume of global trade is priced, bought, and sold using the dollar,” he went on. “This gives countries that receive the dollar great flexibility and strength in managing their trade and imports.” Iraq will lose this crucial edge if oil is traded in currencies other than the US dollar.
“The decision to abandon the sale of oil in dollars is a huge strategic decision that carries risks and wide political and economic consequences that could negatively affect Iraq’s future for decades to come,” the economic researcher said in closing. As such, using this choice as an emotional response to the Fed’s penalties or as a way to vent frustration at the Americans makes no sense.