Informed sources said that Saudi Arabia is in active talks with China regarding the possibility of the latter paying for part of its Saudi oil imports in yuan instead of dollars, a step that could limit the control of the US currency in transactions. of the world oil market. and represents another step of the world’s largest oil exporter to Asia.
And the Bloomberg news agency quoted the sources as saying that talks with China over the yuan’s use in pricing oil export contracts have been oscillating for years, but have accelerated this year with growing dissatisfaction from Saudi Arabia over the decades. former dependency of the United States for national security protection needs.
It is noteworthy that China buys more than 25% of Saudi Arabia’s oil exports. If these exports are priced in yuan, the position of the Chinese currency will strengthen considerably.
At the same time, if this step is taken, it will become a major change in the world oil market, where about 80% of its contracts are priced in dollars. While Saudi Arabia has relied exclusively on the dollar to price its crude oil export contracts since 1974, under an agreement with the administration of the late US President Richard Nixon, which included US commitments to uphold Saudi national security.
It should be noted that China has been awarding contracts to buy oil in yuan since 2018 as part of its efforts to make the Chinese currency tradable on the global market, but has failed to break the US dollar’s grip on the oil market.
At the same time, dependence on the dollar has become a danger for China in the face of US sanctions on Iran for its nuclear program and Russia for its invasion of Ukraine.