The petrodollar system was established in the early 1970’s. It was an agreement between oil-rich Gulf states and the United States. The terms were simple, Oil-rich states would sell their crude oil exclusively in dollars. In return, the United States will provide them with security from internal and external threats and also provide these countries with weapons and technology as well. The concept of the petrodollar was hailed across the United States because it provided stability and demand for U.S. dollars and became the most used currency in the world for international trade and commerce. While the petrodollar had its advantages for the United States it brought major troubles for the global south countries. Drawbacks of petrodollar Since oil-rich countries of the Gulf agreed they would sell crude oil only in U.S. dollars created problems for a lot of smaller countries. The main problem they faced was to hold significant amounts of dollars in their reserves if they wanted to buy