You've probably seen the headlines. There was that massive wave of panic on social media recently about the petrodollar "dying" because some 50-year-old contract supposedly expired. Honestly, it’s mostly noise. People love a good "collapse of the empire" narrative, but the reality of the relationship between saudi arabia us dollars is way more nuanced, a bit more boring, and arguably more stable than the internet wants you to believe.
Let’s get one thing straight right out of the gate: there was no single "petrodollar treaty" that vanished into thin air on June 9, 2024. What actually happened was the expiration of the United States-Saudi Arabian Joint Commission on Economic Cooperation.
That commission was basically a high-level committee for technical cooperation. It didn't dictate what currency Riyadh uses to sell its oil. That part—the "oil for dollars" handshake—was always an informal arrangement built on mutual necessity.
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Why the Saudi Arabia US Dollars Connection Isn't Breaking Yet
People talk about de-dollarization like it’s a switch you can just flip. It's not. The link between saudi arabia us dollars is baked into the very foundation of the Kingdom's economy.
Specifically, look at the Saudi Riyal (SAR). Since 1986, the Riyal has been pegged to the US dollar at exactly 3.75. If you go to Riyadh today, in early 2026, that rate hasn't budged. To maintain this, the Saudi Central Bank (SAMA) keeps massive amounts of dollar reserves—roughly $439 billion as of late 2025.
If Saudi Arabia suddenly stopped taking dollars for oil, they’d be sabotaging their own currency's stability. It’s a bit like trying to renovate your house by taking a sledgehammer to the load-bearing walls. Not exactly a genius move.
The Real Debt Play
Interestingly, Saudi Arabia isn't just holding dollars; they’re actively borrowing them. In January 2026, the Kingdom launched a multi-tranche bond offering denominated in—you guessed it—US dollars. We're talking 3, 5, 10, and 30-year bonds.
Why would a country "dumping the dollar" commit to paying back debt in that same currency for the next three decades? They wouldn't. They are using these dollar-denominated funds to bridge a budget deficit expected to hit 165 billion riyals this year.
The BRICS Factor: Hedging, Not Hating
Now, it’s true that Saudi Arabia is dating other people. Joining BRICS+ in 2024 wasn't just for the photo op. Riyadh is clearly moving toward a multipolar world. They’ve flirted with the idea of "petroyuans" and even "petro-euros."
Finance Minister Mohammed Al-Jadaan said as much at Davos: they are open to trade in other currencies. But "open to" and "doing" are different things. Currently, about 80% of global oil trade is still in greenbacks.
China is Saudi Arabia’s biggest customer, and yes, there have been talks about settling some trades in Yuan. But here’s the kicker: what do the Saudis do with a mountain of Yuan? They can buy Chinese goods, sure. But they can’t easily park that money in a deep, liquid bond market like the US Treasury market. The "petrodollar" is as much about where the money is spent as it is about how it’s priced.
Vision 2030 and the Dollar
MBS (Crown Prince Mohammed bin Salman) is obsessed with Vision 2030. He’s trying to build Neom, turn the desert into a tourist hub, and launch a global tech powerhouse. All of that requires massive foreign direct investment.
Most of those investors? They want to deal in dollars.
By opening their equity markets to all foreigners in early 2026, the Saudis are practically begging for more international—and largely dollar-based—capital. They even removed eligibility restrictions for non-resident investors to juice liquidity. It’s a play for growth, and right now, the dollar is the fastest fuel available.
Misconceptions You Should Stop Believing
- "The 1974 deal expired." Again, no. The 1974 Joint Commission ended, but the informal "security-for-oil-in-dollars" understanding is a geopolitical reality, not a dated contract.
- "They are dumping US Treasuries." Not quite. While they’ve diversified, Saudi Arabia still held over $140 billion in US Treasuries as of late 2024. They’ve actually increased holdings in some months to park oil surpluses.
- "The Riyal will de-peg soon." Extremely unlikely. Analysts from S&P Global and various Gulf banks suggest the peg is "on autopilot" through 2026. SAMA’s interest rates still religiously track the US Federal Reserve.
The Future of Saudi Arabia US Dollars
The relationship is changing from a "marriage of necessity" to a "strategic partnership with options."
Saudi Arabia is playing both sides. They’ll buy Chinese JF-17 fighter jets (as rumored in the $4 billion "debt-for-arms" discussions) while simultaneously issuing dollar bonds to Wall Street. They are becoming a "swing state" in global finance.
If oil prices stay soft—forecasted around $61 for Brent in 2026—Riyadh will actually need the dollar's stability more, not less. Low oil prices mean tighter budgets. Tighter budgets mean more borrowing. And the international bond market speaks dollar.
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Actionable Insights for 2026
If you're watching the markets or planning business in the region, keep these moves on your radar:
- Watch the Fed, not just the King: Because of the peg, Saudi interest rates will move with US ones. If the Fed cuts rates in late 2026 as predicted, expect Saudi banks to follow suit immediately.
- Monitor SAMA Reserves: If you see Saudi foreign exchange reserves drop below $350 billion, that’s when you worry about the peg. At $439 billion, they have plenty of "armor."
- Diversification is Currency-Neutral: Don't mistake Saudi Arabia's move into tech or tourism as an attack on the dollar. It’s an attack on their own dependence on oil. They are happy to take your dollars to build a roller coaster in the desert.
- The "Unit" is a Ghost: BRICS is talking about a gold-backed "Unit" for trade. It’s a cool idea on paper, but it’s years—maybe decades—away from being a functional reality that could replace the dollar in Riyadh.
The saudi arabia us dollars link is evolving, but it's not breaking. Riyadh is simply getting better at playing the field while keeping the most important relationship in its wallet.
Next Steps for You
Keep a close eye on the US-Saudi Defense Pact negotiations. If a formal "Plan B" security deal is signed in 2026, it will likely include explicit clauses that keep oil priced in dollars for another generation, effectively ending the de-dollarization rumors for good. Additionally, monitor the Saudi Public Investment Fund's (PIF) US equity holdings; if they continue to buy into American tech, their commitment to the dollar remains ironclad.