According to reports, Saudi Arabia is considering to trade oil with China in yuan, a move that is seen to dent the US Dollar’s status as the world’s reserve currency.
According to the Wall Street Journal, Saudi Arabia and China are in “active talks” to price some Saudi oil deliveries to China in yuan rather than US dollars.
The talks have been ongoing for six years, but have recently “increased” due to Saudi concerns over the United States’ security promises to the country. According to the site, Saudi elites are particularly dissatisfied with the Biden administration’s stance on the Yemeni civil war, the Iran nuclear agreement discussions, and the haphazard US pullout from Afghanistan.
In the 1970s, Saudi Arabia and the United States agreed to price oil sales in US dollars, establishing the dollar as the world’s leading reserve currency.
Saudi Arabia isn’t the first Middle Eastern country to consider abandoning the dollar as a medium of exchange for oil purchases. Prior to the 2003 invasion, Saddam Hussein opted to price oil in euros rather than dollars. Libyan ruler Muammar Gaddafi is reportedly said to have advocated buying oil with gold in 2009, two years before the NATO-backed rebellion that brought him down. Both incidents have sparked a slew of conspiracy theories.
China has intensified its courting of Saudi Arabia. China has recently aided Saudi Arabia in the development of its own ballistic missiles, provided nuclear program advice, and begun investing in Crown Prince Mohammed bin Salman’s pet projects, such as Neom, a futuristic new metropolis. President Xi Jinping of China has been asked to visit Saudi Arabia later this year.
For long years, Saudi Arabia and China have been building commercial ties. Last Monday, Aramco, the Saudi oil behemoth, decided to develop a huge refinery facility in China.