The spike in 1970s oil prices was a direct reaction to the U.S. abandoning the gold standard. Oil-producing countries were no longer being paid in gold-backed dollars, so they raised prices from $3 to $40 per barrel to compensate for the currency's rapid loss of purchasing power.

The US dollar's dominance is less about its role in oil transactions (petrodollar) and more about its deep integration into global banking and financial plumbing via the Eurodollar system. This structural entrenchment makes it incredibly difficult to displace.

To fund its ambitious domestic projects and international equity investments, Saudi Arabia has shifted from being a major source of global capital to a net borrower. It borrowed $100 billion in the last year, becoming the largest borrower in the emerging world and a drain on global dollar liquidity.

The US dollar retains its reserve status because oil is traded exclusively in dollars (the petrodollar system). This creates a constant, structural global demand for dollars from every country needing energy. This system underpins America's ability to run massive deficits that would have collapsed any other currency.

The primary driver of the US-Iran conflict is seen as a defense of the US dollar's global supremacy. A potential Russia-China-Iran alliance trading in gold would threaten the petrodollar system, which underpins America's economic empire, making the war a necessary defensive move.

The conflict will force Gulf nations to divert capital inward for increased defense spending and rebuilding. This reduces the surplus "petrodollars" available for foreign investment, which could suppress demand for assets globally, including US Treasuries, and tighten global financial conditions.

By selectively allowing passage for tankers pricing oil in Chinese Yuan, Iran is playing a high-stakes game. This forces countries to bypass the US dollar to secure their energy supply, directly threatening the foundation of American global economic power and accelerating de-dollarization.

The US military action in Venezuela is viewed through the lens of the petrodollar system. It's seen as another instance of the U.S. aggressively targeting a nation that challenges the dollar's dominance by not denominating its oil exports in USD.

Despite political tensions, a vast majority of global trade, including oil sales between US adversaries China and Russia, is denominated in US dollars. This reliance gives the US an unparalleled national security tool and soft power, as the trade must cross through US financial institutions.