The Preservation of the Petrodollar and the Capture of Nicolas Maduro

The capture of the Venezuelan President Nicolas Maduro has raised questions addressing domains ranging from the legality to the catalysts. While the U.S. has condemned Venezuela for fostering drug rackets, one of the pivotal underlying causes can be a recurring historical pattern that has jeopardized the U.S. stability and influence.

The prominence of the U.S. hegemony stands on multiple pillars spanning from military to economic drivers that strengthen the foundations of the American dream. One of them is the system of the Petrodollar, which goes back to an economic arrangement agreed upon by the United States of America and Saudi Arabia in the 1970s, after the fall of the gold standard and the 1973 oil crisis.

What is the Petrodollar?

The Petrodollar is neither a currency nor an economic phenomenon, yet it is a critical determinant of the stability of the US Dollar. The half-century-old economic system lets the US Dollar feed off the global oil trade. According to this system, any kind of oil trade should be in US Dollars, regardless of where it originates or is sold. This means that an oil-importing country had to acquire US Dollars to trade, assuring a constant demand for the dollar. Moreover, the dollars received by the countries exporting the oil got reinvested in the American market. This system of constant demand and re-investment has kept the dollar stable and the American hegemony persistent.

Threat to The Petrodollar

The last couple of decades have seen numerous attempts taken by leaders from sanction-laden countries to disrupt the sacrosanct Petrodollar system, followed by a vehement retaliation from the U.S.

Saddam Hussein’s Pivot to the Euro

Saddam Hussein was the President of Iraq, controlling the second-largest oil reserves at that time. In 1999, he decided to escape the petrodollar system by utilising the multilateral Euro. The shift was considered peculiar as the Euro waned to its lowest ebb. All the oil exports of Iraq under the UN Oil-for-Food Programme were paid in Euros after 2001.

The shift was subjected to immense mockery as the value of the Euro deteriorated and the US Dollar was considered to be the only currency dominating the global oil trade. However, the rise of the Euro against the US Dollar, urging other countries like Iran, Venezuela, which started bartering Oil with countries like Cuba, and Russia, which intended to increase its oil trade with Europe, became a major threat to the US Dollar. 

The threat to the dollar was neutralised as Saddam Hussein was captured in 2003 following the US invasion of Iraq, who were accused of possessing weapons of mass destruction.  

Gaddafi’s bet on a Gold-backed system

Muammar Gaddafi, the Libyan dictator, was the next challenge to the Petrodollar system, as he proposed a replacement for the US Dollar with his gold-backed Libyan Dinar to the African Union. Libya possessed immense gold and oil reserves, complemented by a firm influence over the African nations, threatening both the Dollar and the Euro.

However, this threat withered away with the assassination of Muammar Gaddafi post the NATO intervention aimed at mitigating the humanitarian crisis caused by the protests that turned into a civil war. 

The Rise of Petroyuan and The Capture of Nicolas Maduro

Petroyuan, which has been on an alarming rise in the last few years, has been a testament to China’s increasing economic influence and has established itself as the strongest competitor to the Petrodollar dominance. The sanction-laden countries like Venezuela, Russia, and Iran have been major facilitators of these de-dollarization efforts.

However, with developments like the introduction of the Shanghai International Energy Exchange, Chinese adoption of the Central Bank Digital Currency, and improvements in China-Saudi Arabia Relations, as well as major powers finding an alternative to the Western dollar's dominance in Trump's tariff regime, the U.S. has continuously been on edge. 

In these circumstances, when the Venezuelan President Nicolas Maduro expressed his intentions to trade oil in Yuan and other digital currencies with a reserve of 303 billion oil barrels, the United States of America had to defend its hegemonic status. 

The capture of Nicolas Maduro on January 3, 2026, is thus speculated by many experts as being a method of protecting America’s petrodollar dominance.

The Way Ahead

The control over Venezuelan oil might save the U.S. Petrodollar collapse temporarily, but the quandary persists because of China’s growing global assertiveness, coupled with the mistrust in the U.S. because of the tariffs that are considered tyrannical by a majority of nations. Moreover, a major violation of various international laws and treaties has opened a Pandora’s box for the U.S. as the uncertainties amongst the nations intensify, and the reactions can be catastrophic for the United States of America.

BY BHASKAR JHA

THE INDIAN NETIZENS

References

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The Guardian. (2003, February 16). Iraq nets a handsome profit by dumping dollars for euros. https://www.theguardian.com/business/2003/feb/16/iraq.theeuro

Heard, G. (2003, March). Not oil, but dollars vs. euros. Global Policy Forum. https://archive.globalpolicy.org/nations/sovereign/dollar/2003/03oil.htm

Teltumbde, A. (2026, January 6). Maduro’s real crime was ditching the dollar. Frontline. https://frontline.thehindu.com/world-affairs/de-dollarisation-us-empire-venezuela-nicholas-maduro-iraq-saddam/article70476918.ece

Ahmed, S. (2025, February 26). The rise of the petroyuan: Is the US dollar losing its energy monopoly? Modern Diplomacy. https://moderndiplomacy.eu/2025/02/26/the-rise-of-the-petroyuan-is-the-us-dollar-losing-its-energy-monopoly/

Bin Javaid, O. (2026, January 5). Venezuela after Maduro: Oil, power and the limits of intervention. Al Jazeera. https://www.aljazeera.com/news/2026/1/5/venezuela-after-maduro-oil-power-and-the-limits-of-intervention