How the U.S.‑Israel war against Iran is exposing the limits of the petrodollar system

The Conversation · 🇦🇺 public Australia · May 12, 2026 · 979 words · By Elliot Goodell Ugalde; Natalie Braun

U.S. Fiscal Vulnerability Geopolitical Instability Petrodollar System Collapse

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What to know about U.S. Fiscal Vulnerability

The article discusses the risks associated with U.S. public debt exceeding GDP, specifically focusing on the potential for Gulf states to divest from U.S. assets. It examines the role of the petrodollar system, the use of central bank swap lines as a stabilization tool, and the impact of geopolitical tensions with Iran on global financial stability.

Propaganda risk 30%

Claims checked 8

Techniques found 3

Topics 3

Coverage spectrum

Coverage gap: Low Left coverage

Left0%

Center86%

Right14%

7 sources compared across this story cluster. This is an eFinder estimate from indexed source coverage, not an editorial rating.

What happened

For the first time since the Second World War, excluding the COVID-19 pandemic, public debt in the United States has surpassed the entire economy’s GDP.

Why it matters

As of late March, debt held by the public reached US$31.27 trillion, just ahead of the GDP of US$31.22 trillion.

Common ground

This threshold is often treated as a long-term fiscal issue, but the economic costs of this debt are now moving to the forefront.

Perspective signals

The tension in the story is sharpened by Loaded Language, Appeal to Fear, Causal Oversimplification: language that can make the dispute feel more urgent, personal, or adversarial than the underlying facts alone.

Follow-up questions

What terms are actually in the Iran proposal, and which side would have to compromise first?
What evidence would most clearly confirm or weaken the claim that For the first time since the Second World War, excluding the COVID-19 pandemic, public debt in the United States has surpassed the entire economy’s GDP?
What happens next if the deal stalls, and who has the power to restart talks?

open_in_new Read the original article: https://theconversation.com/how-the-u-s-israel-war-against-iran-is-exposing-the-…

analyticsAnalysis

30%

Propaganda Score

confidence: 90%

Minor concerns. Some persuasive language detected, but largely factual.

psychologyPropaganda Techniques Detected

eFinder identified 3 propaganda techniques in this article. These signals explain how wording, emphasis, or missing context can shape a reader's interpretation.

warning

Loaded Language 80% confidence

Using words with strong emotional connotations to influence an audience.

Found in this article: eFinder flagged this technique because the story's framing or source language may guide readers toward a particular interpretation. Review the claim checks and evidence below to separate what is directly supported from what is implied by wording or emphasis.

Why it matters: Recognizing loaded language helps readers compare the article's framing with the underlying facts and with coverage from other sources.

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Appeal to Fear 70% confidence

Building support by instilling anxiety or panic in the audience.

Why it matters: Recognizing appeal to fear helps readers compare the article's framing with the underlying facts and with coverage from other sources.

warning

Causal Oversimplification 60% confidence

Assuming a single cause for a complex issue.

Why it matters: Recognizing causal oversimplification helps readers compare the article's framing with the underlying facts and with coverage from other sources.

fact_checkClaims Checked

eFinder analyzed this article and checked 8 claims against available evidence, cross-references, web search, and Wikipedia. Here is what the fact-checking layer found.

check_circle Corroborated 4

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info Single Source 1

verified Verified By Reference 1

verified Verified 1

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Claim 1: “For the first time since the Second World War, excluding the COVID-19 pandemic, public debt in the United States has surpassed the entire economy’s GDP.”

DISPUTED

One source claims public debt surpassed GDP for the first time since WWII (excluding COVID), but another source (thebalancemoney.com) explicitly states the US debt-to-GDP ratio has exceeded this threshold since 2009.

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wikipedia NEUTRAL — Following the start of the COVID-19 pandemic in 2020, a worldwide surge in inflation began in mid-2021 and lasted until mid-2022. Many countries saw their highest inflation rates in decades. It has be…
https://en.wikipedia.org/wiki/2021–2023_inflation_surge

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wikipedia NEUTRAL — The COVID-19 recession was a global economic recession caused by COVID-19 lockdowns. The recession began in most countries in February 2020. After a year of global economic slowdown that saw stagnatio…
https://en.wikipedia.org/wiki/COVID-19_recession

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wikipedia NEUTRAL — The COVID-19 pandemic caused far-reaching economic consequences including the COVID-19 recession, the second largest global recession in recent history, decreased business in the services sector durin…
https://en.wikipedia.org/wiki/Economic_impact_of_the_COVID-1…

+ 3 more evidence sources

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Claim 2: “U.S. Treasury Secretary Scott Bessent recently said that several American allies in the Gulf region and Asia had requested swap lines”

CORROBORATED

Multiple independent sources (France24 and several web news results) confirm Treasury Secretary Scott Bessent stated that Gulf and Asian allies requested swap lines due to the Iran conflict.

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wikipedia NEUTRAL — The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States. The secretar…
https://en.wikipedia.org/wiki/United_States_Secretary_of_the…

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wikipedia NEUTRAL — Scott Kenneth Homer Bessent ( BESS-ənt; born August 21, 1962) is an American businessman, financial analyst, and government official serving since 2025 as the 79th United States secretary of the treas…
https://en.wikipedia.org/wiki/Scott_Bessent

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wikipedia NEUTRAL — The Ukraine–United States Mineral Resources Agreement is an agreement between the United States and Ukraine establishing terms for joint investment in Ukraine's natural resources, including critical r…
https://en.wikipedia.org/wiki/Ukraine–United_States_Mineral_…

+ 4 more evidence sources

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Claim 3: “As of late March, debt held by the public reached US$31.27 trillion, just ahead of the GDP of US$31.22 trillion.”

CORROBORATED

Two independent sources provide the exact figures: public debt of $31.27 trillion and GDP of $31.22 trillion as of late March/April.

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wikipedia NEUTRAL — The United States has a highly developed and diversified market-oriented economy. It is the world's largest economy by nominal GDP, generating 26% of global economic output. It is the second-largest b…
https://en.wikipedia.org/wiki/Economy_of_the_United_States

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wikipedia NEUTRAL — This is a list the 50 largest U.S. counties and county equivalents by gross domestic product in US$, representing the year at the top of the column, unless otherwise specified.
https://en.wikipedia.org/wiki/List_of_U.S._counties_by_GDP

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wikipedia NEUTRAL — This is a list of U.S. states and territories by gross domestic product (GDP). This article presents the 50 U.S. states and the District of Columbia and their nominal GDP at current prices. The data s…
https://en.wikipedia.org/wiki/List_of_U.S._states_and_territ…

+ 3 more evidence sources

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Claim 4: “Gulf states — whose confidence in U.S. fiscal and military protection has been shaken by the U.S.-Israel attacks on Iran — collectively hold roughly US$2 trillion in U.S. assets through their sovereign wealth funds.”

SINGLE SOURCE

While sources discuss sovereign wealth funds in the Gulf and their caution, no source provides the specific figure of 'roughly US$2 trillion in U.S. assets'.

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web search NEUTRAL — Cash-rich sovereign wealth funds from Asia and the Middle East may be turning cautious after getting burnt by investments in Western firms hit by the current financial turmoil, analysts said.
https://www.smh.com.au/world/sovereign-wealth-funds-turning-…

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web search NEUTRAL — Sovereign Wealth Fund (SWF): A state-owned investment fund used to...
https://www.investopedia.com/terms/s/sovereign_wealth_fund.a…

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web search NEUTRAL — Sovereign wealth funds from oil-producing countries mainly in the Middle East and Africa are on course to dump up to $225 billion in equities, a senior banker estimates, as plummeting oil prices and t…
https://www.cnbc.com/2020/03/29/oil-rich-wealth-funds-seen-s…

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Claim 5: “During the 2008 crisis, the Fed used swap lines as an emergency backup to extend dollar liquidity to banks and governments that suddenly needed it.”

VERIFIED BY REFERENCE

Wikipedia and Brookings both confirm that the Federal Reserve uses central bank swap lines to provide dollar liquidity, specifically mentioning their use during the Global Financial Crisis (GFC/2008).

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wikipedia NEUTRAL — The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of th…
https://en.wikipedia.org/wiki/Federal_Reserve

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wikipedia NEUTRAL — A Federal Reserve Bank is a regional bank of the Federal Reserve System, the central banking system of the United States. There are twelve in total, one for each of the twelve Federal Reserve District…
https://en.wikipedia.org/wiki/Federal_Reserve_Bank

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wikipedia NEUTRAL — The Board of Governors of the Federal Reserve System, commonly known as the Federal Reserve Board, is the main governing body of the Federal Reserve System of the United States. It oversees the Federa…
https://en.wikipedia.org/wiki/Federal_Reserve_Board_of_Gover…

+ 3 more evidence sources

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Claim 6: “This was part of a broader arrangement known as the petrodollar system, which traces back to a 1974 agreement between the U.S. and Saudi Arabia.”

CORROBORATED

Multiple sources confirm the petrodollar system is based on a 1974 agreement between the U.S. and Saudi Arabia to price oil in dollars.

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web search NEUTRAL — In 1973, the petrodollar system was created through a deal between the US and Saudi Arabia. The countries agreed to price and trade oil in US dollars. With oil standardized in terms of dollars, any co…
https://www.tonyrobbins.com/blog/what-is-the-petrodollar

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web search NEUTRAL — Origins Of The Petrodollar.One of the primary steps taken to end the Oil Crisis of 1973-74 was an alliance between the U.S. and Saudi Arabia. In June 1974, the U.S. and Saudi Arabia signed a milestone…
https://www.fxcm.com/uk/insights/what-is-the-petrodollar/

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web search NEUTRAL — Gulf states were central to this, using oil revenues to buy U.S. bonds, stocks, real estate and weapons. This was part of a broader arrangement known as the petrodollar system, which traces back to a …
https://theconversation.com/how-the-u-s-israel-war-against-i…

verified

Claim 7: “In March, one Gulf official said three of the four largest economies in the Gulf Cooperation Council were reviewing their sovereign wealth fund positions to offset the impact of the Iran war.”

VERIFIED

A specific report quotes a Gulf official stating that three of the big four GCC economies are assessing investments due to the duration of the conflict, and Wikipedia confirms the existence of a '2026 Iran war'.

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wikipedia NEUTRAL — The Arab states of the Persian Gulf commonly referred to as the Gulf Arab states comprise Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. These seven Arab states are gr…
https://en.wikipedia.org/wiki/Arab_states_of_the_Persian_Gul…

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wikipedia NEUTRAL — The Cooperation Council for the Arab States of the Gulf (Arabic: مَجلِس التَّعَاوُن لِدُوَلِ الْخَلِيْجِ الْعَرَبِيَّة), also known as the Gulf Cooperation Council (GCC; Arabic: مجلس التعاون الخليجي),…
https://en.wikipedia.org/wiki/Gulf_Cooperation_Council

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wikipedia NEUTRAL — This timeline of the 2026 Iran war covers the period since 28 February 2026. The war is ongoing.
https://en.wikipedia.org/wiki/Timeline_of_the_2026_Iran_war

+ 3 more evidence sources

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Claim 8: “The United Arab Emirates’ exit from OPEC on May 1 shows how far the old energy-financial bargain has fractured.”

CORROBORATED

Multiple cross-references from CNBC and Flipboard confirm the UAE's exit from OPEC on May 1.

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cross reference SUPPORTS — the United Arab Emirates' exit from OPEC on May 1
https://www.cnbc.com/2026/04/29/cnbc-daily-open-oil-takes-an…

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cross reference SUPPORTS — The UAE’s exit from OPEC on May 1
https://flipboard.com/topic/news/uae-quits-opec-in-shock-mov…

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cross reference SUPPORTS — The UAE’s exit from OPEC on May 1
https://flipboard.com/topic/news/opec-shocker-as-uae-leaves-…

+ 2 more evidence sources

info Disclaimer: This analysis is generated by AI and should be used as a starting point for critical thinking, not as definitive truth. Claims are verified against publicly available sources. Always consult the original article and additional sources for complete context.