The sale of oil denominated in dollars is essential for the support of the US dollar. In turn, maintaining demand for dollars by world central banks for their currency reserves to back foreign trade of countries like China, Japan or Germany, is essential if the United States dollar is to remain the leading world reserve currency. That status as world’s leading reserve currency is one of two pillars of American hegemony since the end of World War II. The second pillar is world military supremacy.However Engdahl finishes his essay by suggesting that this will be good for world peace!
Because all other nations need to acquire dollars to buy imports of oil and most other commodities, a country such as Russia or China typically invests the trade surplus dollars its companies earn in the form of US government bonds or similar US government securities. The only other candidate large enough, the Euro, since the 2010 Greek crisis, is seen as more risky.
That leading reserve role of the US dollar, since August 1971 when the dollar broke from gold-backing, has essentially allowed the US Government to run seemingly endless budget deficits without having to worry about rising interest rates, like having a permanent overdraft credit at your bank.
Step-by-step, Russia, China and other emerging economies are taking measures to lessen their dependency on the US dollar, to “de-dollarize.” Oil is the world’s largest traded commodity and it is almost entirely priced in dollars. Were that to end, the ability of the US military industrial complex to wage wars without end would be in deep trouble.I have long argued that wealth and, especially under capitalism, its associated drug of power has taken hold of the Empire's ruling class in the form of an addiction. I really mean this literally, not rhetorically!
Perhaps that would open some doors to more peaceful ideas such as spending US taxpayer dollars on rebuilding the horrendous deterioration of basic USA economic infrastructure.
So, you know what often results when an opium addict or alcoholic can no longer afford their drugs? Often this results in more violence and criminal activities perpetrated by the addicts to secure money to buy their drugs. This has been the history of capitalist nations for several hundred years during colonialism and nowadays in neocolonialism and neoliberalism. The main difference, and a very dangerous one, is that most of the major nations today have nuclear weapons to fight each other with. I don't see how Engdahl can be so sanguine about the future.
The only peaceful future is one that we ordinary people must secure for ourselves by ending the rule of capitalists and their destructive, unsustainable system. There is simply no other alternative.
(Note: For more background on the petrodollar you might be interested in reading this and this.)