In the simplest of terms, the petrodollar system is the practice of trading oil for U.S. dollars, and U.S. dollars only (rather than another currency). This means that no matter what country is buying the oil, they pay the oil-producing country in dollars. And this is the petrodollar system. The dollar is the world’s reserve currency, making it the medium of exchange for goods, services, trade, travel, investments, commodities and much more. The petrodollar has a central role in enabling all of this. Many feel that this arrangement gives the U.S. “exorbitant privilege” as oil is the most sought-after commodity in the world, and thus being priced and traded solely in dollars makes the U.S. dollar the most dominant currency. The petrodollar has had a considerable impact on shaping U.S. foreign policy, global trade and geopolitics for the last 50 years.