Swift Global Changes
Submitted by Atlas Indicators Investment Advisors on May 25th, 2026
The petrodollar system materialized in the early 1970s as Saudi Arabia agreed to sell oil in U.S. dollars exclusively in exchange for military protection. In return, Saudi Arabia reinvested at least a portion their oil revenues into U.S. Treasury Securities. Ultimately, this agreement extended to other oil producing nations. This arrangement has, in part, funded America’s deficit spending over the last 40+ years as oil producing countries sold so much dollar-priced oil that exporters could not reinvest it all into their own economies fast enough. To this day, roughly 80% of oil transactions still take place in U.S. dollars.
Helping facilitate petrodollar domination is the SWIFT (Society for Worldwide Interbank Financial Telecommunications) messaging protocol. This is a communications standard which does not hold or even transfer assets, but it allows banks to give secure messages about where large sums of money need to move to settle big transactions like purchasing a lot of oil.
Importantly, America’s dominance in oil trade and money transfer could be diminishing. China has set up the Cross-Border Interbank Payment System (CIPS). Unlike SWIFT, CIPS actually moves the money and does so in real-time using the Chinese Yuan. SWIFT-initiated transactions can take up to five days to complete. As of 2026, barrels of oil have been trading using CIPS and e-yuan (the Chinese digital currency). CIPS currently connects 1600 institutions across 180+ countries. While this is shy of the over 11,000 institutions with access to SWIFT, it is certainly a reasonable start.
On the intermediate horizon, this could all wreak havoc on borrowing rates. A diminishing pool of petrodollars would likely put upward pressure on interest rates in America as fewer barrels of oil get settled in dollars while America’s appetite for borrowing goes virtually unchecked. In effect, a system that once quietly recycled global energy demand into consistent support for U.S. debt may erode at the margins. This does not mean an abrupt disruption in dollar dominance, but it does suggest that tides are shifting and doing so swiftly.
