Clipped from: https://www.thehindu.com/opinion/editorial/fearing-de-dollarisation-on-the-us-oil-and-the-petrodollar/article70491351.ece
U.S.’s moves on oil reflect its uneasiness over global trade and finance
Updated – January 10, 2026 10:05 am IST
President Donald Trump’s urgency to push the Russia Sanctions Bill through Congress, granting him the power to impose tariffs of up to 500% on nations buying oil from Moscow, is officially framed as a punitive measure to weaken Russia’s war economy. Yet, this legislative push comes just after the capture of Venezuelan President Nicolás Maduro on January 3. Throughout his press briefings thereafter, Mr. Trump emphasised Venezuela’s vast oil reserves as America’s underlying strategic interest. This twin focus on Russian sanctions and Venezuelan oil assets suggests that both measures are less about geopolitical ‘penalisation’ and more about protecting the petrodollar’s dominance at a time when its hegemony is eroding. For decades, oil has been priced and largely settled in U.S. dollars. That system underpinned the dollar’s centrality in global finance for much of the late 20th century. But since the sanctions on Russia following its 2014 annexation of Crimea, and, more vigorously, after the Ukraine invasion in 2022, major consumers such as China and India have deepened trading arrangements that circumvent the dollar. India, for instance, imported substantial volumes of Russian crude since 2022, accounting for more than 20% of Russia’s war-period crude exports. China’s purchases were even larger, reflecting its strategy to secure energy at a discount and experiment with non-dollar settlement mechanisms.
China’s use of the yuan in energy trade has significantly enhanced the internationalisation of the renminbi. India has also reportedly begun paying for some Russian crude in yuan, signalling small but telling shifts in how global energy commerce is conducted. Meanwhile, the oil market is evolving with the global energy transition — electric vehicles sales, led by China, are reshaping demand patterns. Mr. Trump’s “return to oil” rhetoric and policy thrust must thus be read in the context of this transition. China’s dominance in the EV ecosystem represents a structural challenge not just to oil firms but also to the broader economic and financial architectures that supported U.S. dominance for decades. In this light, it is not far-fetched to argue that America’s aggressive moves in Venezuela and its hardline strategy against Moscow on oil (and not much else) are aimed more at curtailing China’s expanding influence — both in energy markets and in pushing alternatives to the petrodollar — than at addressing geopolitical grievances. Moreover, the spectre of a parallel currency arrangement contemplated by BRICS as a challenge to the ‘mighty dollar’ further unsettles traditional dollar-centric financial orders. What is at stake is not merely oil or geopolitics, but the architecture of global trade and finance at a moment of historic transition.
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