The world is changing, and the speed and scope at which it is doing so in terms of economic and military dominance has not been seen in centuries. For starters, gone are the days when Saudi Arabia was unquestionably in sync with the needs and wants of the U.S. The former has been negotiating with China to price some oil transactions in yuan, not dollars; in addition, it has joined the Shanghai Cooperation Organization as a “dialogue partner” and expressed interest in joining BRICs. The relevance of these organizations cannot be overstated. Not only do they exclude the United States, in time they will likely acquire, in the aggregate, the capacity to challenge the dollar’s status as reserve currency of the world (RCW). Given the degree to which America’s economy depends on oil, and barring the introduction and deployment of a new mechanism to perpetuate today’s quasi-infinite global demand for dollars, the day is approaching when the inexorable depletion of existing petroleum reserves will leave the U.S. with no choice but to elbow out friends and foes alike for control of the commodity.

In 1941 Japan went to war because it needed oil from the (then) Dutch East Indies to offset America’s oil embargo, and Germany tried to pry the Caucasus from the Soviet Union and the Persian Gulf from Britain. Though both failed, after the war they and most of Europe ended up relying on the U.S. to keep the sea lanes to the Persian Gulf open and on the Soviet Union/Russia to provide them with cheap pipeline oil and gas. That era is coming to a screeching halt because the U.S. and Europe, with some exceptions, intend to stop importing Russian oil and gas as part of a response to the latter’s invasion of Ukraine. However, other powerful forces are at play. Not only is depletion inevitable, the current high rate of inflation in the U.S. and Europe, and the specter of a looming recession in the U.S. and Europe (but not in China) may force the collective West to eventually reconsider the rejection of Russian fossil fuels. But there’s a silver lining. Climbing interest rates in the U.S. and high energy prices in Europe have caused the dollar to appreciate relative to the world’s major currencies meeting. Clearly the market still views the dollar as the safest depository of wealth, a perception that all but guarantees a continued strong global demand for it. Whether intentional or accidental, for the foreseeable future this is a de facto genial defense of its status as RCW. Therein the nexus between the dollar and Jamie Dimon’s statement regarding oil.