The Dollar Without Petro: Dual Hormuz–Red Sea Blockade Cuts Saudi–US Crude Oil Exports to Zero

Throughout the entire month of July 2026, the US received zero crude oil shipments from Saudi Arabiafor the first time since 1985. The war with Iran, launched to strengthen the petrodollar system, has produced the opposite effect — it is undermining the very foundation of American financial power.

War Continues and Blockades Tighten

The petrodollar agreement, officially the US-Saudi Arabia Joint Commission on Economic Collaboration signed in June 1974, mandated the Arabian country to sell its oil in US dollars, and also buy US Treasury instruments, facilitating recycling of the then expanding Saudi oil wealth into the US financial system. Saudi Arabia was promised, among other things, protection, which was to occur in US military presence, many layers of defense agreements, and endless purchases of expensive US weapons, which are now proven inadequate and ineffective. This arrangement created permanent demand for the US dollar, loosely meaning that the US dollar, which had exited the gold standard, was now backed by the vibrant oil trade. It also enabled US banks to earn a margin from trade between other nations, while the US was able to borrow cheaply and maintain a large trade deficit, which will progressively become impossible if the US war on Iran continues.

Losing the Dollar is Equivalent to Losing a War – Trump

The US war on Iran has so far brought results that Washington has never experienced, arguably in its existence. While most of Washington’s wars, such as in Afghanistan, Iraq, and Syria, gave........

© New Eastern Outlook