It's very reminiscent of Gaddafi's ideas, who wanted a "United States of Africa" which was less dependent on the West and could repel looters, a gold dinar as a united currency, a single army to defend the continent, and a single passport. One of the emails from the Hillary Clinton email leak stated:

"Qaddafi's government holds 143 tons of gold, and a similar amount in silver ... This gold was accumulated prior to the current rebellion and was intended to be used to establish a pan-African currency based on the Libyan golden Dinar. This plan was designed to provide the Francophone African Countries with an alternative to the French franc (CFA)."

"According to knowledgeable individuals this quantity of gold and silver is valued at more than $7 billion. French intelligence officers discovered this plan shortly after the current rebellion began, and this was one of the factors that influenced President Nicolas Sarkozy's decision to commit France to the attack on Libya. According to these individuals Sarkozy's plans are driven by the following issues:

1. A desire to gain a greater share of Libya oil production,
2. Increase French influence in North Africa,
3. Improve his internal political situation in France,
4. Provide the French military with an opportunity to reassert its position in the world,
5. Address the concern of his advisors over Qaddafi's long term plans to supplant France as the dominant power in Francophone Africa."

As to why exactly why a gold dinar would help, here's this explanation:

It is banks, not governments, that create most of the money in Western economies, as the Bank of England recently acknowledged. This has been going on for centuries, through the process called 'fractional reserve' lending. Originally, the reserves were in gold. In 1933, President Franklin Roosevelt replaced gold domestically with central bank-created reserves, but gold remained the reserve currency internationally. In 1944, the International Monetary Fund and the World Bank were created in Bretton Woods, New Hampshire, to unify this bank-created money system globally. An IMF ruling said that no paper money could have gold backing.

A money supply created privately as debt at interest requires a continual supply of debtors; and over the next half century, most developing countries wound up in debt to the IMF. The loans came with strings attached, including 'structural adjustment' policies involving austerity measures and privatization of public assets. After 1944, the US dollar traded interchangeably with gold as global reserve currency. When the US was no longer able to maintain the dollar's gold backing, in the 1970s it made a deal with OPEC to 'back' the dollar with oil, creating the 'petro-dollar'. Oil would be sold only in US dollars, which would be deposited in Wall Street and other international banks.

In 2001, dissatisfied with the shrinking value of the dollars that OPEC was getting for its oil, Iraq's Saddam Hussein broke the pact and sold oil in euros. Regime change swiftly followed, accompanied by widespread destruction of the country. In Libya, Qaddafi also broke the pact; but he did more than just sell his oil in another currency. As these developments are detailed by blogger Denise Rhyne:

"For decades, Libya and other African countries had been attempting to create a pan-African gold standard. Libya's al-Qadhafi and other heads of African States had wanted an independent, pan-African, 'hard currency'. Under al-Qadhafi's leadership, African nations had convened at least twice for monetary unification. The countries discussed the possibility of using the Libyan dinar and the silver dirham as the only possible money to buy African oil. Until the recent US/NATO invasion, the gold dinar was issued by the Central Bank of Libya (CBL). The Libyan bank was 100% state owned and independent. Foreigners had to go through the CBL to do business with Libya. The Central Bank of Libya issued the dinar, using the country's 143.8 tons of gold. Libya's Qadhafi (African Union 2009 Chair) conceived and financed a plan to unify the sovereign States of Africa with one gold currency (United States of Africa). In 2004, a pan-African Parliament (53 nations) laid plans for the African Economic Community - with a single gold currency by 2023. African oil-producing nations were planning to abandon the petro-dollar, and demand gold payment for oil/gas."

As far as I'm aware, the mere fact that oil is sold in dollars is less important than the fact that the money that countries like Saudi Arabia make from oil is then invested into America. Some people bundle these two facts into the concept of the "petrodollar", while others say that only the first fact is really the "petrodollar" and so don't care as much about dismantling the petrodollar as others do.

Straight from Michael Hudson himself:

Wait a minute. I think we’re talking about two different meanings of the “petro-dollar.”

In balance-of-payments terms, the impact of Saudi petrodollars went far beyond just pricing oil in dollars. Yves is quite right about how that pricing was not so novel. After all, most raw materials have been priced in dollars. What was key — and I was part of discussions in the White House in 1974 — was WHAT Saudi Arabia DID with the dollars it obtained for its oil when prices quadrupled. The State Department and Treasury said that it would be an act of war if they did not RECYCLE THESE DOLLARS into the U.S. economy.

So there was a great capital inflow into the US — not to buy major U.S. companies (it was forbidden to do that), but to buy U.S. stocks and bonds, including U.S. Treasury bonds. It bought Citibank stock in particular, I remember (and didn’t do very well in this). The key was that oil-exporting countries recycle their dollar export earnings into the U.S. economy. THAT is what supported the dollar’s value. It also flooded into U.S. banks, which relent much of this inflow to Third World countries, setting the stage for the post-1982 debt crash when Mexico said that it could not pay its tessobonos.

Yves downplays this a little by saying that regardless of whether the US demanded it or not, there wasn't really anywhere else for Saudi money to go - the euro didn't exist at this time. But the end result is the same, with the Saudis and other OPEC states buying stocks and bonds in America to boost the economy with the oil money they were making. There are some people who claim that the US dollar, despite being fiat, is effectively being backed by oil, and so if oil was priced in other currencies then it would actually make a big difference. I don't really know enough to say definitively if that's the case. But on balance I tend to believe that the actual battle being waged in the Saudi-China-US fight over what currency oil should be in isn't so much "Should we make oil be priced in dollars, or yuan, or a mix of local currencies?" but instead "Where should the money that Saudi Arabia makes from the oil actually go - into the US, into China, somewhere else entirely?

Back to the present day - sentiment is not enough to make an entirely new currency. But as US and French influence declines, we might well see another big push in the coming years towards at least creating parts of this scheme.