If you don't already know, Saudi Arabia has been showing signs of leaving the petro-dollar, and has applied for a BRICS membership.
The BRICS alliance, consisting of Brazil, Russia, India, China, and South Africa, represents a powerful bloc of emerging economies with significant influence in global affairs.
The BRICS meeting is starting today, and tomorrow it will be announced whether the Saudis are approved into the BRICS alliance.
The inclusion of Saudi Arabia, a key player in the oil industry and a major global economic player, would undoubtedly alter the dynamics of this alliance and reshape the economic order.
Saudi Arabia's move to potentially depart from this system and join BRICS could disrupt the dollar's role as the world's primary reserve currency. If Saudi Arabia shifts its oil trade to alternative currencies or commodities, it could lead to a decline in demand for the dollar and trigger a significant reevaluation of global economic relationships.
The potential departure of Saudi Arabia from the petro-dollar system could also have profound repercussions on global monetary markets.
Not only dollar, but other currencies can be affected.
Other countries may follow suit, diversifying their currency reserves away from the dollar, which could contribute to fluctuations in currency exchange rates and interest rates.
Saudi Arabia's status as a major oil producer and exporter lends it significant influence over global oil prices. If the country decides to alter its trading currency or join BRICS, it could lead to fluctuations in oil prices and the broader commodities market. A departure from the petro-dollar system could prompt other oil-producing countries to reconsider their trading mechanisms, potentially leading to shifts in supply and demand dynamics and consequent price volatility.
As there will likely be a lot of uncertainty surrounding the global economic order, it could lead investors and institutions to seek alternative investment opportunities.
Cryptocurrencies have often been viewed as a hedge against traditional financial systems, and could thus meet increased interest and investment as the traditional markets face disruption. But since crypto markets are still young and volatile, and are subject to regulatory uncertainties, it could hinder some of the adoption.
We might be in for a price war for just about everything. In this recession we are currently experiencing, even the price of commodities like food can be affected, and possibly not in a good way.
What do you think will happen to crypto prices following such move?
