A Saudi official says: The United States abandoned us and redirected its air defense to protect Israel.
“They left all the Gulf states that host American military bases at the mercy of Iranian strikes.”
That statement alone explains why this moment is bigger than just a war.
Since the 1970s, the deal between the US and Saudi Arabia was simple.
After the oil crisis, the US and Saudi leadership reached an agreement:
• Saudi Arabia would price oil only in US dollars.
• Oil revenues would be reinvested into US Treasury bonds and dollar assets.
• Other Gulf countries followed the same model.
In return:
• The US would provide military protection.
• Advanced weapons systems.
• Security guarantees against regional threats.
That agreement created what we now call the petrodollar system. Because oil is traded in dollars, every country needs dollars to buy energy.
That constant demand keeps the US dollar strong globally.
Now fast forward to recent events.
In late 2024, Saudi Arabia was negotiating a formal defense treaty with the United States.
That deal slowed down and was eventually dropped due to political disagreements and regional tensions.
Then during the 2025 Iran-Israel escalation, something very important happened.
The US reportedly asked Gulf countries, including Saudi Arabia, to transfer air defense systems like THAAD interceptors to help defend Israel.
That was the first visible sign that Gulf countries were becoming more cautious and less willing to fully align.
Now in 2026, the situation has escalated further. Iran began striking US linked assets and bases inside Gulf countries.
Missiles and drones targeted locations in countries that host American military infrastructure.
Even if these countries were not leading the war, they became targets because US forces operate from their soil. And this is where the Saudi statement becomes critical.
If Gulf leaders feel that:
• They host US bases.
• They take the risk of retaliation.
• But when attacks happen, US air defense is prioritized for Israel instead of protecting Gulf infrastructure.
Then the core foundation of the security deal gets questioned.
The petrodollar system was never just about currency.
It was built on security trust. Oil in dollars in exchange for protection.
If that protection looks uncertain, then the political reason to stay fully tied to the dollar weakens over time.
This does NOT mean oil suddenly stops being priced in dollars tomorrow. But gradual erosion will start:
• A larger share of oil trade settled in yuan or other currencies.
• Gulf sovereign funds reducing their exposure to US Treasuries.
• Diversification of defense partnerships beyond Washington.
• Energy contracts structured in mixed currencies.
None of this requires a dramatic announcement. It happens slowly.
Today roughly 20% of global crude trade is already done in non dollar currencies.
China has been pushing for yuan based settlement for years.
Gulf countries have been building stronger ties with China and Asia, both economically and strategically.
If Gulf leaders feel exposed in this war, that process can accelerate.
