BRICS: U.S. Dollar Losing Dominance in the Global Oil Sector

Vinod Dsouza
us dollar oil and gas brics

The BRICS alliance kicked off the de-dollarization process by inducting oil-producing countries into the bloc. BRICS aims to control the global oil markets by using local currencies for trade settlements and not the U.S. dollar. The USD, which once had a strong footprint in the oil sector, seems to be losing ground currently. Developing countries are looking to end the stronghold of the dollar and are pushing to strengthen their native currencies.

Also Read: BRICS GDP in Purchasing Power Parity Reaches 37% Of the Global Economy

BRICS: U.S. Dollar on Shaky Grounds in the Global Oil and Gas Sector

us dollar brics usd oil and gas

A recent report from JP Morgan on the de-dollarization process initiated by BRICS highlighted that the U.S. dollar is slowly losing dominance in the global oil sector. The research titled “De-dollarization: Is the U.S. dollar losing its dominance?” shows that the dollar is shaky in the oil and gas sector.

Also Read: BRICS: China Aiming to Bring Down the U.S. Economy

“The U.S. dollar, one of the key drivers of global oil prices, appears to be losing its once powerful influence,” wrote Natasha Kaneva, the Head of Global Commodities Strategy at JPMorgan.

The power of the U.S. dollar in the oil sector was dipping even before BRICS initiated the de-dollarization process. The worrisome part of the report stated that the dollar had briefly yet steadily declined in the last 10 years. “Overall, we find that the importance of the dollar has declined significantly from 2014 to 2022,” wrote Jahangir Aziz, JP Morgan’s Head of Emerging Markets.

Also Read: How Much Oil & Commodity Expanded BRICS Control?

However, JP Morgan stressed that the U.S. dollar decline in the oil sector was minimal, but that was long before the BRICS started the de-dollarization efforts. If the new extended BRICS bloc, which includes top oil-exporting countries like Saudi Arabia, the UAE, and Egypt, begins to accept local currencies, then the U.S. dollar could be in jeopardy.

In conclusion, the stronghold of the U.S. dollar now depends on how well the BRICS play their cards in the oil sector. Read here to know how many sectors in the U.S. will be affected if BRICS stops trading in the dollar.