I see no reason why they would switch except for liquidity (as opposed to valuation) concerns. The IMF has said that moving to a basket of currencies would make global trade more stable, but eh who knows.

It used to be that drug dealers liked the US hundred dollar bill, but there is now a two hundred euro bill, worth twice as much. This means drug dealers can now pack twice the full-faith-and-credit into the same suitcase, to the benefit of Brussels and the detriment of Uncle Sam. The euro is way more useful than the dollar.

I sometimes think the most meaningful economic reform would be the introduction of a two hundred dollar bill. Intuitively, it seems that the costs would be vanishingly small–not much beyond the design. I'm sure John Adams would be happy to have his portrait on it, and no one could be politically more acceptable that a Founding Father.

That this will never even be considered is just one more folly brought to you by the war on drugs.

It’d benefit the Gulf States the most to switch pricing, but on the other hand they have trillions in US bonds that would be severely damaged by a move away from the dollar.

I don't really see how changing the denomination would benefit the Gulf States in any significant way, particularly because “they have trillions in US bonds that would be severely damaged by a move away from the dollar.”

Also, I believe the US is still the number one consumer of oil, making our currency the most efficient choice out there. Even if the Eurozone were close, there would still be significant costs to changing the denomination that would be borne by all consumers, without any particular near term benefits to balance out those costs.

At some point in the near term, China, or maybe India, may overtake us as the world's leading consumer of oil. Even then, I doubt the governments of either China or India would want their country's economy exposed by denominating oil in their native currency. I doubt that either country would be able, economically or politically, to suffer the slings and arrows of such outrageous fortune as price shocks would inevitably deliver. Even the potential for price variation ought to give pause to any serious consideration of switching the denomination.

I recognize that these have the ring of famous last words, but I just don't see it in any kind of near term. And in the long run we're all dead anyway.

Uncle Sam is still the only sensible choice.

Mish's (correct) point is that it has little to do with what oil is priced in, and more to do with their decision to sock all their reserves in US assets. As China and the gulf diversify into other assets, it'll put pressure on the dollar, but to me it's unclear whether that will be able ot counteract the decrease in dollars flowing abroad due to our declining trade deficit.