Saudi Arabia is reportedly in active talks with China to price some of its oil sales in yuan rather than dollars or euros, people familiar with the matter said.
This move “would dent the U.S. dollar’s dominance of the global petroleum market and mark another shift by the world’s top crude exporter toward Asia,” said The Wall Street Journal.
Talks between the two nations over oil contracts have been on and off for the past six years but have stepped up in 2022.
Saudis are allegedly angry over the United States’ nuclear negotiations with Iran and its lack of support for Saudi Arabia’s military operation in Yemen.
According to the Journal, almost 80 percent of global oil sales are priced in dollars and Saudi Arabia has exclusively used the dollar for oil trading as part of a security agreement with the U.S. government since the 1970s.
More than 25% of the oil that Saudi Arabia exports is bought by China, meaning that, if priced in yuan, those sales would boost the standing of China’s currency.
“China introduced yuan-priced oil contracts in 2018 as part of its efforts to make its currency tradable across the world,” said Fox News. However, they haven’t put a dent in the dollar’s dominance of the oil market.
China’s economic relationship to Saudi Arabia has grown closer, with 1.76 million barrels of oil a day being provided in 2021.