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Why is oil traded in US Dollars?

Anonymous

∙ 15y ago

Updated: 4/28/2022

Well most of the oil features contracts are negotiated on the NYMEX (New York Merchantile Exchange) and the contracts-negotiated in dollars are used in the benchmark pricing of the oil. Wasswa

Wiki User

∙ 15y ago

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What percentage of the US GDP is from oil?

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Dollar is international currency and when the dollar is weak countries would be able to purchase more quantity of oil with lesser currency...however this is only when OPEC keep the prices stable Crude oil is mainly traded in US dollars, and when the US dollar weakens the crude oil market participants (speculators, producers, refineries, etc.) push the price of crude higher on the expectations that oil producers are entitled to at least the same prices as before in their own currencies, after exchanging US dollars into their currency. In economics such relationships are explained by Purchasing Power Parity theory.

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Most oil contracts are valued in US dollars. Therefore, if the US dollar weakens, an oil producer will demand more dollars for the same oil, all other things being equal. -ecn

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Are securities in all stock exchanges around the world traded in the US currency?

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