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Why Non Gulf Exporters Are Winning This Oil Spike
- Higher oil prices are not creating a classic Gulf windfall because key Gulf exporters cannot ship normal volumes through the disruption.
- Setser says winners are Russia, Kazakhstan, Nigeria, Angola, South America, Norway, and North American producers, not Kuwait, Iraq, UAE, or fully Saudi Arabia.
How The Seventies Oil Shock Rewired Finance
- The 1970s oil shock reshaped both energy use and finance by cutting oil intensity and creating huge offshore dollar surpluses.
- Saudi petrodollars often went into hidden Treasury purchases and London eurodollar banks, which then lent to oil-importing emerging markets before Latin America's debt crisis.
Why Dollar Dominance Now Runs Through Equities
- Modern petrodollars flow less into reserves and more into return-seeking portfolios like equities, private equity, and sovereign wealth funds.
- Setser notes a typical reserve portfolio is about 57% dollars, while global equity portfolios and Saudi overseas investments are far more dollar-heavy.