Weakening the position of the dollar?Saudi Arabia plans to open up oil sales to China in RMB | Anue Juheng – International Political Economy

The Wall Street Journal (WSJ) reported that Saudi Arabia is in active talks with Beijing and may accept some of China’s oil purchases as aRMBinstead ofDollarpricing,RMBOnce heard the news turned red.China buys regarding 25% of Saudi Arabia’s crude oil exports if the crude oilRMBPriced to help enhance its international status.

According to reports, Saudi Arabia discussed with ChinaRMBThe denominated crude oil contract has been on and off for six years, but discussions have accelerated significantly this year, largely due to Saudi Arabia’s growing dissatisfaction with the United States, including its lack of support for Saudi Arabia’s meddling in the Yemeni civil war, and the United States’ interest in a nuclear deal with Iran. Saudi officials have also said they were shocked by the U.S. withdrawal from Afghanistan last year.

If Saudi Arabia accepts crude oil for exportRMBPricing, will help improveRMBstatus.Saudi Arabia is also considering, accepting in state oil company Aramco’s pricing modelRMBDenominated futures contracts, so-called “oilRMB(Petroyuan)

offshoreRMB once morestDollarOn Tuesday (15th), following hearing the news, it stopped depreciation and rebounded, rising 0.1% at one time, reversing the decline of 0.3% earlier, and remained at slightly above 6.39 before the deadline. RMB once morest 1 Dollarlevel.

offshoreRMBIt tumbled more than 1.1 percent in the three sessions through Monday, its worst decline this year.offshoreRMBThe 200-day moving average is currently at 6.4116 RMBis still the near-term support point.

Changes in Saudi-U.S.-China Trilateral Relations

Although Saudi Arabia exports 6.2 million barrels of crude oil per day, some are notDollardenominated, but withRMBPricing will still be a significant shift.About 80% of global oil sales areDollarIn 1974, the United States agreed to provide Saudi Arabia with arms and equipment on the condition that theDollarAs the only currency in which oil transactions are priced.

Launched in China in 2018RMBDenominated oil contracts to boostRMBthe status of cross-border transactions, but so far has not crackedDollarDominance in the oil market.Under U.S. sanctions on Iran and currently on Russia, useDollarThere is a certain level of danger for the Beijing authorities.

China has been actively courting Saudi Arabia in recent years, including assisting Saudi Arabia in deploying ballistic missiles, consulting on its nuclear program, and investing in Saudi Crown Prince Mohammed bin Salman’s “Neom” zero-carbon city plan And so on, Saudi Arabia has also invited Chinese President Xi Jinping to visit later this year.

Xi Jinping meets the king of Saudi Arabia in 2017. (Photo: AFP)

Meanwhile, relations between Saudi Arabia and the United States have deteriorated sharply. Saudi Arabia’s crown prince refused to participate in a conference call between U.S. President Biden and the Saudi king on Russia’s aggression once morest Ukraine last month following being accused by the United States of killing dissident journalist Jamal Khashoggi in 2018. It also refused to respond to U.S. demands to ease soaring oil prices.

Not only that, the United States is now the world’s largest oil producer, and although Saudi Arabia is still in the oil market, the economic relationship between the two countries is becoming increasingly weak.

Saudi Arabia was China’s top crude supplier last year, selling 1.76 million barrels a day, followed by Russia with 1.6 million barrels a day.However, the WSJ report did not mention how willing the Saudis were to accept, or how many deals they would accept.RMBvaluation.

Wall Street view

Victor Xing, director of Kekselias, said: “Many countries, including U.S. allies, are beginning to understand that they have a large number ofDollarJust false stability.Anytime a political decision can lead toDollarReady to be frozen or confiscated.Saudi Arabia foresees such a shift and believes thatRMBPricing can be increasedRMBtrade surplus, and a reduction inDollarpart. “

Sacha Tihanyi, head of emerging markets strategy at TD Securities, said: “Maybe this helpsRMBMorale, as it helps the currency gain wider adoption. It is said that (RMBdenominated) will involve a “portion” of crude oil, but I’m not sure of its significance. “

International oil prices fell on Tuesday, West Texas andBrent CrudeBoth closed down more than 6%, falling below 100 per barrel DollarInteger level, falling into a bear market that has dropped more than 20% from recent highs, due to multiple cases in China soaring and lockdowns, ceasefire talks between Russia and Ukraine continue, Iran nuclear deal negotiations are regarding to resume and are expected to be finalized, and the United States plans to open up Venezuelan oil imports .


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