[autumnraine]

I’ve heard for years if we stopped trading oil in dollars, the dollar will crash. Do you think this is true?

[b4its2late]

Interesting for 2006:

Structural Changes – Destruction Of The U.S. Dollar

Here's part of it:

Factors Destabilizing the Dollar

- Oil Trading in Euro and the Iran Oil Bourse
- The real-estate bubble starts collapsing
- Bank of China’s decision to allow investors to buy and sell gold using their USD
- Continued increase of U.S. public and trade deficits in 2006
- Growing doubts in the U.S. themselves on the reliability and interpretation of US economic statistics
- The Potential for Military Intervention in Iran
- Increasing risk of Conflict with China

The Future of Oil Trading in Euro - Creation of the Iranian Oil Bourse

One of the elements of the plan includes the pricing and trading of oil in Euros. For the plan to work oil producing countries and purchasers will gradually convert the oil trading to alternate currencies. The primary issue is when will the Euro be a significant currency of oil trade—not specifically on the Iran Oil Bourse. With the conflicts existing between the Shia and Sunni countries, the IOB may not have the major impact some anticipate. Iran oil production amounts to 4 percent of world oil.

Iran's opening of an Oil Bourse priced in Euros (And possibly ultimately in the Islamic Gold Dinar.) was originally planned to initiate operations at the end of March 2006. According to the Iran Ministry of Petroleum the delayed opening is a result of “technical glitches.” No new date has been set. While Pravda on January 21 indicated that the IOB opened. The opening may be the end of the monopoly of the Dollar on the global oil market and potentially impact the Dollar as the reserve currency for world trade. The longer-term result is likely to upset the international currency market, as producing countries will be able to charge their production in Euros also. In parallel, European countries in particular will be able to buy oil directly in their own currency without going though the Dollar. Concretely speaking, in both cases this means that a lesser number of economic actors will need a lesser number of Dollars. This double development will thus head to the same direction, i.e. a very significant reduction of the importance of the Dollar as the international reserve currency, and therefore a significant and sustainable weakening of the American currency, in particular compared to the Euro. The most conservative evaluations give €1 to $1.30 US Dollar by the end of 2006. But if the crisis reaches the scope anticipated, estimates for the Euro in 2007 are even higher.

[TheRiverNile]

I’ve heard for years if we stopped trading oil in dollars, the dollar will crash. Do you think this is true?

It's basic supply and demand. Sense the dollar has nothing supporting it, the only thing that supports keeps its value up is that there has been an inherent demand for it.

If you evaporate a large part of that demand, then a rapid devaluation ensues.

This devaluation hurts further confidence in the dollar and even further devalues it. Since the dollar is only paper, the only true bottom is the greater of the value of the paper or the value for which the government is willing to redeem it for in other units in order to stabilize the currency.

[La.daddyrabbit]

Not sure if it’s true, but I have read some plausible information about dollar dominance and it’s status as a reserve currency worldwide due to oil price traded in dollars. Iran has been threatening to establish an oil trading bourse for years. They may be behind this as well.
Having petro traded in another unit of currency would drastically devalue the dollar, according to the article.