Saudi Arabia, China, Others To Dump US Dollars For Yuan In Oil Purchase
Information reaching Naija News House says that Saudi Arabia, China, Others To Dump US Dollars For Yuan In Oil Purchase
The move would erode the U.S.dollar’s supremacy in the global petroleum market, indicating yet another shift toward Asia by Saudi Arabia.
Saudi Arabia is actively negotiating with Beijing to price part of its oil sales to China in yuan, Wall Street Journal reports.
Persons familiar with the matter said the negotiation was accelerated by Saudis’ dissatisfaction with the United States security pledge to defend the kingdom.
According to sources, Saudis are enraged by the United States’ refusal to support their engagement in Yemen’s civil war, as well as the Biden administration’s attempt to reach an agreement with Iran over its nuclear program.
The move would erode the U.S. dollar’s supremacy in the global petroleum market, indicating yet another shift toward Asia by the world’s top crude exporter.
Saudi officials had said they were taken aback by the abrupt pullout of the United States from Afghanistan last year.
If successful, the deal will further strengthen economic ties between China and the Saudis as Beijing purchases more than a quarter of Saudi Arabia’s oil exports. If priced in yuan, the sales would raise the value of China’s currency.
Reports indicate that the Saudis are also thinking of incorporating yuan-denominated futures contracts, known as the petroyuan, into the pricing model of Saudi Arabian Oil Co., known as Aramco.
It would be a significant move for Saudi Arabia to price even a portion of its nearly 6.2 million barrels of petroleum exports in a currency other than dollars.
The vast bulk of worldwide oil sales roughly 80 per cent are conducted in dollars, and the Saudis have done so solely since 1974, when they struck a deal with the Nixon administration that provided security guarantees for the country.
The Saudi-American relationship deteriorated under President Biden, after the U.S. president suggested that the monarchy be considered a “pariah” following the murder of Saudi journalist Jamal Khashoggi in 2018.
Prince Mohammed, who US intelligence officials think ordered Mr Khashoggi’s murder, refused to participate in a phone call last month between Mr Biden and Saudi ruler King Salman.
However, in recent years, China has assisted Saudi Arabia in developing its own ballistic missiles, provided advice on a nuclear program, and begun investing in Crown Prince Mohammed bin Salman’s pet projects, such as Neom, a futuristic new metropolis.
China’s President Xi Jinping has been invited to visit Saudi Arabia later this year.
China launched yuan-priced oil contracts in 2018 as part of its efforts to make its currency more globally marketable, but they haven’t slowed the dollar’s dominance of the oil market.
Using dollars has become a risk for China, as seen by U.S. sanctions on Iran over its nuclear program and on Russia in response to the invasion of Ukraine.
China’s oil imports have risen steadily over the previous three decades, in tandem with the country’s growing GDP.
Data from China’s General Administration of Customs, details that Saudi Arabia was China’s top crude supplier in 2021, selling 1.76 million barrels per day, followed by Russia at 1.6 million barrels per day.
