If the demand side of the oil market can be artificially inflated by fiat currency, the supply side can certainly be impacted by the recognition that the intrinsic value of fiat currency is little more than zero (since it only retains its value as long as it is perceived as scarce). Place yourself in the shoes of a Saudi or Russian oil minister. Why trade your increasingly scarce oil for a limitless future stream of paper money? This paper money only has value to the extent that it can buy scarce goods and services.

If the global paper money supply is mathematically guaranteed to grow faster than the supply of goods and services, it sure seems like a bad idea to keep adding to one of the world’s largest U.S. Treasury bond portfolios. Perhaps the Saudis will continue recycling petrodollars back into Treasury bonds, but with the precaution of diversifying into gold as a portfolio hedge. Yet this may not be practical, since diversifying even the smallest fraction of a trillion-dollar Treasury bond portfolio into the tiny gold market is enough to send bullion to stratospheric prices.

This is a geologic fact: The most prolific Saudi oil reservoirs, which have produced enormous quantities of oil for generations, will eventually peak. The matter open for debate is when the peak will occur and whether production from new reservoirs can ramp up in time to offset declines. At some point, the Saudis will admit that they cannot reach their long-term production goals, due to uncontrollable decline rates in mature reservoirs.
Therefore they will buy hard assets versus bonds to keep up with inflation. Gold !!!!!!!!!!!!!