| During World War Ⅱ,the United States provided a large amount of its domestic oil to support the Allies,meanwhile,which lead to a growing concern in American government that the country’s oil reserves would be exhausted.Controlling overseas oil(particularly that of the Middle East)has since become a vital American interest.After World War Ⅱ,the American government established an oil order by supporting international oil companies to control the exploitation and sale of Middle Eastern oil.The Bretton Woods system was established in 1944,and thus the US dollar had become the most important reserve currency in the international system.As the world’s primary currency,the US dollar accounts for about 87%of international foreign exchange transactions.In oil trade,nearly one tenth of US dollars in the Marshall Plan were used by Western European countries to buy oil.With economic recovery,Western European countries wanted to use their own currencies to buy oil,especially Britain,which increased its purchases of "British oil" starting in 1949."British oil" constituted a challenge to "Dollar oil".However,because of the Cold War and the economic situation in Western Europe,the United States did not challenge the existence of "British oil".Therefore,not only USD was used in oil trade at that time.Before the 1970s,the "Seven Sisters" had already succeeded in controlling oil.However,with a large number of independent companies entering the oil market after the war,competition in the oil market gradually increased.International oil companies adopted ways of reducing the price of oil in order compete in the market,which endangered the interests of oil-producing countries.The governments of oil-producing countries confronted international oil companies by establishing international organizations.After President Nixon took office,American domestic oil consumption increased while production decreased.As a result,the U.S.lost much of its influence on the oil market.The governments of oil-producing countries gradually took control of oil resources.The controlling force in oil was thus transferred from oil companies to oil producers.Consumers in the United States and Western European countries would therefore face threats against their energy security via oil production cuts and embargoes.Trade deficits caused by high oil prices was another problem.The improper use of increased oil revenues by Middle Eastern oil producers disrupted the international financial market.As the most important ally of the United States,Saudi Arabia has the largest oil reserves in the world.The U.S.government hoped that Saudi Arabia could increase production to meet the needs of oil consumer countries,while the Saudi government hoped that the United States could guide its rational use of the increased revenue.Since 1973,the two countries had negotiated in energy and currency issues.The outbreak of the October War interrupted the negotiation process between the two countries.Saudi Arabia and other Middle East oil producers used oil as weapon,leading the oil prices rapid increased.The high oil prices had caused a serious negative impact on the energy security and economic development of all oil importing countries.In 1974,the federal government deficit in the U.S.was increasing,and the oil prices exacerbated the crisis in the financial markets of the United States.Developing countries were most seriously affected,and these countries were unable to pay for high-priced oil.The economies of Western Europe and Japan also suffered.They tried to sign relevant intergovernmental agreements with oil-producing countries to solve the energy problem,but failed.If countries all took measures such as currency devaluation to alleviate their crises,the international monetary system may face collapse.In order to solve the problems in the energy and monetary fields,after the U.S.government successfully lifted the oil embargo,the U.S government signed a series of intergovernmental secret agreements with the Saudi government.This proposed reducing oil prices and shifting large amounts of dollars held by oil-producing countries to consumers.Thus the U.S.dollar became the sole currency for oil trading.The United States has also formulated a secret plan for Saudi Arabia to invest revenue capital back into the United States.These funds could make up for America’s fiscal deficit,and provide loans to oil importing countries through international organizations and banks,thus forming the petro-dollar system.The petrol-dollar system has stabilized the international monetary system,the problem of America’s fiscal deficit and the shortage of funds in developing countries in the short term.However,problems caused by the depreciation of the dollar spill over and are experienced by other countries.The key role of this system is to ensure the interests of the U.S.,strengthen its hegemony and give the U.S.and the USD special powers.The reason why the United States succeeded in established this system is that Saudi Arabia was willing to accept the US dollar.Thus it is a political agreement that determines the special status of the US dollar.With the constant development and change of oil trade,the contradiction between market mechanisms and political agreements causes inherent problems in this system.In the future,the currency used in oil trade will become an important field of political and economic competition among countries. |
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