This is the petrodollar hypothesis, a debunked theory of global trade.
Oil is globally traded. It can be and is priced in many currencies. Most international trade was historically priced in dollars for two reasons. The second was, until recently, the unique speed and breadth of the Fedwire system.
The first is the American consumer. When Americans buy, we spend dollars. This puts dollars in vendors’ hands. Those dollars can be reused for trade or invested, the latter supporting dollar financial markets. Both support dollar hegemony, which in turn drives its dominance in global trade and finance.
Oil is priced in dollars, and countries borrow in dollars, because dollars reign supreme. Not the other way.
> In 2018, the strong dollar broke Argentina and Turkey’s currencies and drove the countries into recession
Argentina and Turkey’s currencies devalued relative to their trade-weighted baskets of currencies. The dollar was not a driver of their problems.
> foreign dollar-denominated debt means there is a ton of demand for dollars
Domestic demand for cash eclipses foreign demand. The Fed and Congress have printed trillions, yet we’re still on the precipice of deflation.
> the United States government is heavily reliant on foreigners lending it money by buying its Treasuries. Foreigners currently hold $6.7 trillion in U.S. government debt.
Out of $25 trillion [1]. Also, $7 trillion is comparable to the amount Congress and the Fed just created.
Currency crises are broadly studied. They are also complex. This analysis is overly reductive.
[1] https://en.m.wikipedia.org/wiki/National_debt_of_the_United_...