Of Oil and USD - No More Fairytales

The US dominated the global stage with 3 things – military, currency and media. Of currency, the petrodollar system is the foundation. Oil is to be traded in USD. Countries who require oil to power up their industries have no choice but to get USD to buy oil. It is on this basis that the US can sit comfortably at the top of the pyramid, printing money and freely adjusting interest rates, reaping off the labour and resources of other countries to maintain their hegemony.

And hence, the petrodollar system is the red line which cannot be crossed. The consequences of crossing that red line is severe.

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History and Background

In 2000, Iraq decided to sell its oil in Euro. In 2003, the US invaded Iraq and Saddam Hussein was subsequently executed. In 2011, Libya wanted to push for a unified African currency backed by gold, and gold will be used as payment for oil and gas. NATO bombed Libya the same year.

South America has been known to be the backyard of the US. Sovereign in name, but actually controlled by the US. Venezuela, having the richest oil reserves in the world, decided to be friendly with China despite US sanctions, and its oil sale to China was traded in the Chinese RMB. We know that on 3 January 2026, US moved into Venezuela, captured its President and took control of its oil.

Iran, having been sanctioned by the US, has also been dealing its oil with China in RMB. We know that Iran now is facing its largest civil unrest in decades demanding an end to its current regime, also due to US interference.

Maintenance of US Hegemony

One will not fear a country who has no ability to execute violence, nor a country who has the ability but not the willingness to do so. But a country who has the ability and willingness to execute violence is to be feared. There has been talks about countries being sick of the US unreasonable, constant reaping of other countries and its own allies. They are sick of being manipulated to provide free labour and resources to the US and still get stomped upon by the US.

Hence, more and more countries start to deviate towards China, the current number 2 who is viewed as the one which will threaten the US hegemony on the world. There has even been talks that China will lead the new world order.

In Chinese there is a saying: If the tiger does not show its prowess, you would think I am a sick cat. Hence the US military moved in, not to conquer the land, but a quick military operation to capture the president. It played cheat a bit, in that it did not sink itself into the pits with a full scale invasion but a quick hit and run and declared victory. That being said, the ability to pull that off is not a joke.

Objectives

I always said that high level political decisions seldom fulfil only one objective. Let us see a few objectives that are met.

US has proven it still has the ability and willingness to execute violence.
US is sending a message across the world not to step on its red line.
US is telling the world that South America is still within its control and it has considerable influence in the Middle East.
If the US can kidnap the leader of a country that easily, which other leaders can they assassinate?

China

It is human nature that he who occupies the number 1 position will stop the number 2 from catching up at all cost. It does not apply to the US, but past and future countries who occupy the very top of the pyramid. One very good example is that countries who obtained nuclear weapons joined the party in clamping down on those countries who are trying but not yet achieved that technology.

We know now with the military operation in Venezuela, lesser countries will use RMB as a trade currency, and those who are thinking of doing so will probably sit back for a while.

In the currently fast crumbling world order, countries are also categorised into tiers. Those at the bottom sell off their resources. Those in the middle manufacture goods for the world. And those at the top dictate how the world operates – US controls the financial and technological sector of the world, UK (IGCSE) and Europe (IB) dictates how education should be, Europe as a whole sets the standard for high end manufacturing and branded goods.

South America is a continent known for its vast resource of minerals. So if the US, sitting at the top, re-exerts its dwindling control on South America again, this time with more force, it controls the top and bottom of the pyramid. It does not take a genius to infer what sort of pressure the middle will face.

How it will all turn out, I do not know. Afterall, the Chinese is a tenacious bunch of people, and China has a lot of smart people. But it certainly is not going to be fighting on easy mode.

Conclusion

I think it is evident that certain countries now will be fighting to control as many resources as they can. Previously, I had bought stocks on companies necessary for China’s survival – water, electricity, rubber, sugar, oil, pork (food) and chemical companies (for production of goods). Most of them are doing well now. As for what opportunities this latest development will bring, I will have to observe further.