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Petrodollars are oil revenues denominated in U.S. dollars.

They are the primary source of revenue for many oil-exporting members of OPEC, as well as other oil exporters in the Middle East, Norway, and Russia.

All oil purchases from OPEC must be paid in U.S. dollars.

If Mexico wants to buy oil, it has to sell its local currency and buy U.S. dollars, then use those dollars to buy oil from OPEC.

Any country that buys oil from OPEC must do so using petrodollars.

Petrodollars are U.S. dollars paid to an oil-exporting country for the sale of the commodity.

Put simply, the petrodollar system is an exchange of oil for U.S. dollars between countries that buy oil and those that produce it.