Petrodollar Recycling
Oil exporters taking the dollars they earn from selling crude and investing them back into the world economy.
Petrodollar recycling is what happens to the mountain of petrodollars oil exporters earn. Countries like Saudi Arabia cannot spend it all at home, so they send it back out: buying US Treasuries, stakes in companies, property, and funding sovereign wealth funds.
This flow helped support demand for US assets after the oil shocks of the 1970s and is part of why the dollar remains so central. When oil prices fall, the flow shrinks, and exporters may even sell assets to cover their budgets.
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