Current oil shock differs from 1970s in magnitude: price increase ~50% vs. 6-7x then. Physical interruption may be bigger but price reaction smaller due to market uncertainty about future supply.

Explains futures market balancing between scenario of plenty of oil in 2-3 months (back to $60) vs. persistent disruption ($150+).

Winners from higher oil prices are non-Gulf exporters: Russia, Kazakhstan, Nigeria, Angola, South America, US/Canada, Norway. Gulf states unable to capture windfall due to export constraints.

Saudi Arabia needs $100 oil with 7M bpd exports to break even; with reduced exports, they need even higher prices.

1970s petrodollar boom was temporary; by 1990s, Saudi surplus was spent. Recent oil boom (2003-14) saw diversification into equities and alternatives via sovereign wealth funds.

Notes reserve portfolios have lower dollar share (~57%) than equity portfolios (~65-70% US), challenging notion that reserves are main source of dollar inflows.

De-dollarization narrative is not credible while dollar remains strong and total dollar claims on US continue to grow. World must stop funding US in dollars for de-dollarization to occur.

Points to China's $100B/month FX intervention as larger flow than petrodollars, and notes sanctioned countries would prefer to sell in dollars if possible.

Saudi Arabia has flipped from petrodollar source to drain, borrowing $100B last year to fund domestic spending and overseas investments.

Contrasts with UAE which has such wealth it can be pure investor without needing current oil revenue.

Current oil shock manageable for Europe, but highlights fossil fuel dependence. Bigger impact will be on oil-importing Asia.

Notes Europe's shock smaller than loss of Russian gas in 2022.

Despite perceptions of US as reckless, dollar remains transactional medium of choice because it's efficient. Dollar strength reflects global overweight to US assets.

Argues question is whether intense dollar overweight is sustainable given US policies; answer so far is yes.