Instead of a signed agreement, Saudi Arabia sold its oil mostly for dollars over the years simply because most of the world wants dollars. Benefiting from a persistent bid for US dollars for decades, it was maximally profitable for the kingdom to consistently sell oil to dollar-denominating bidders.
Similarly, the US military has protected Saudi oil fields over the years, not because it reluctantly adhered to terms of an ancient pact, but because the US has an interest in protecting its oil interests and encouraging purchases of US treasuries. US treasuries fund the US government and military.
Saudi Arabia produces approximately 9 million barrels of oil per day. The country’s GDP-to-debt is less than 30% — far healthier than the 100% ratio it held 34 years ago when it took loans to survive a late-1980s crash in oil prices. It has flexibility to sell its oil to bidders in various currencies and will continue to evaluate the profitability and diplomatic implications of accepting non-USD payment.
