Saudi Arabia Mulls Yuan Instead of Dollar for Oil Sales

The Kingdom of Saudi Arabia is in talks with the Chinese government to price some of the Gulf nation’s oil sales to China in yuan instead of dollars or euros, a move showing growing unhappiness between Riyadh and Washington.

Citing people familiar with the matter, The Wall Street Journal reported that the two countries have intermittently discussed the matter for six years, but talks have reportedly stepped up in 2022.

The development came after Riyadh was disgruntled over the US’s nuclear negotiations with Iran and its lack of backing for Saudi Arabia’s military operation in neighboring Yemen and elsewhere.

Nearly 80 percent of global oil sales are priced in dollars, and since the mid-1970s the Saudis have exclusively used the dollar for oil trading as part of a security agreement with the US government, according to the Journal.

The Journal reported that Beijing is looking to make its currency tradable in international oil markets and also spare no efforts to strengthen its relations with Saudi Arabia.  

China has previously supported Saudi in the construction of ballistic missiles and consultation on nuclear power.

Conversely, the Saudi-US relationship has been increasingly frayed in recent years, especially in 2018 when a dissident journalist Jamal Khashoggi was assassinated.

Khashoggi’s murder also erode Crown Prince Mohammed bin Salman’s public relations with Washington sought clarity on the matter.

The rift intensified after US President Biden, who has said the assassination should make the kingdom a “pariah,” took office.

During the same period, China’s economic relationship with Saudi Arabia has grown closer, with the kingdom providing 1.76 million barrels of oil a day to the country in 2021, according to the Journal, citing China’s General Administration of Customs.

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