Everybody knows that oil is priced in US dollars, but let’s make one thing extremely clear: The buyer does not have to pay in dollars, unless the seller gives no other option. Here’s a simple example. Saudi Arabia sells one barrel of oil to Japan.

The prevailing price is $100 and the dollar/yen exchange rate on that day is 80 yen per dollar. Thus, Japan can pay SaudiArabia 8,000 yen and the deal is done — unless Saudi Arabia insists on receiving American dollars or some other currency. If oil was priced in yen, or 8,000 yen per barrel, sellers may still insist on being paid in dollars, euros, or whatever currency they fancy….