Since the 1970s, the USD has been the dominant currency for oil. That meant that countries needed to hold the US dollar to buy and sell oil. Growing tired of a bumbling US President, Saudi Arabia is negotiating with China to sell some using the Chinese Yuan to pay its oil. That is good for the US because it means that all the countries in the world need to trust that the value of the US dollar would hold firm.
Today the WSJ reported:
“Saudi Arabia is in active talks with Beijing to price its some of its oil sales to China in yuan, people familiar with the matter said, a move that 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.
The talks with China over yuan-priced oil contracts have been off and on for six years but have accelerated this year as the Saudis have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom, the people said.
Saudi Arabia has grown increasingly angry with the Biden Administration’s foreign policies. Some of their recent frustration stems from Biden’s attempt to broker a nuclear program deal with Iran and the United States’ decision to withdraw from Afghanistan with no plan for stability in the country.
China has stepped up its courtship of the Saudi kingdom. In recent years, China has helped Saudi Arabia build its own ballistic missiles, consulted on a nuclear program and begun investing in Crown Prince Mohammed bin Salman’s pet projects, such as Neom, a futuristic new city.
The dynamics have dramatically changed. The U.S. relationship with the Saudis has changed, China is the world’s biggest crude importer and they are offering many lucrative incentives to the kingdom,” said a Saudi official familiar with the talks.
“China has been offering everything you could possibly imagine to the kingdom,” the official said.
Doing more sales in yuan would more closely connect Saudi Arabia to China’s currency, which hasn’t caught on with international investors because of the tight controls Beijing keeps on it. Contracting oil sales in a less stable currency could also undermine the Saudi government’s fiscal outlook.
The Saudis still plan to do most oil transactions in dollars, the people familiar with their talks say. But the move could tempt other producers to price their Chinese exports in yuan as well. China’s other big sources of oil are Russia, Angola and Iraq.
The Saudi move could chip away at the supremacy of the U.S. dollar in the international financial system, which Washington has relied on for decades to print Treasury bills it uses to finance its budget deficit.
“The oil market, and by extension the entire global commodities market, is the insurance policy of the status of the dollar as reserve currency,” said economist Gal Luft, co-director of the Washington-based Institute for the Analysis of Global Security who co-wrote a book about de-dollarization. “If that block is taken out of the wall, the wall will begin to collapse.””
This is a disaster waiting to happen! The United States needs people in the White House who understand that their foreign policy decisions can make or break the US dollar! If countries suddenly don’t want to use the USD to buy products such as oil, the dollar’s value will drop drastically. Unfortunately, we have a president who can’t even remember who Russia invaded!
This story syndicated with permission from For the Love of News
Notice: This article may contain commentary that reflects the author's opinion.
My Pillow Coupon Code = ILMF
Tap Here and Use It!
Calling All Americans! Patriot Fetch is Conservative Breaking News Headlines every day, all day. Go to PatriotFetch homepage for daily Conservative news or look below for the next hot story!