A theory popular since 2012 said that Washington's hostility towards Iran was really about defending the "petrodollar". Iraq sold oil in euros, Libya flirted with monetary alternatives, Iran sought non-dollar settlements - and punishment followed. Neat. Too neat.

Oil mattered to the rise of the dollar system, but it never explained the whole system. The dollar still accounted for 57.13% of disclosed global forex reserves in the first quarter of 2026, according to IMF.

The Federal Reserve points to deeper reasons: large and liquid financial markets, safe assets, convertibility, institutional credibility and network effects. Thus, the dollar is not about to disappear because some oil is paid for in yuan, rupees or roubles. The real issue is how monetary power is used.

When so much global finance touches American institutions, sanctions become exceptionally potent. That can be useful. It can also be overused. The more the US turns access to the dollar system into a geopolitical weapon, the more incentive others have to create........

© The Express Tribune