Saudi and Chinese officials are in talks to price some of the Gulf nation’s oil sales in yuan rather than dollars or euros, The Wall Street Journal reported Tuesday, citing people familiar with the matter.
The two nations have discussed the issue on and off for six years, but reportedly escalated in 2022 as Riyadh is unhappy with the US nuclear negotiations with Iran and its lack of support for its intervention in Yemen.
Nearly 80% of global oil sales are denominated in dollars, and since the mid-1970s the Saudis have exclusively used dollars for oil trade as part of a security deal with the US government, according to the Journal. .
The talks are the latest in an ongoing effort by Beijing both to make its currency tradable in international oil markets and to strengthen its relationship with the Saudis in particular. China has previously assisted Riyadh in ballistic missile construction and nuclear energy consulting.
Conversely, Saudi-American relations have become increasingly frayed in recent years. Crown Prince Mohammed bin Salman initially presented a public image as a reformer, liberalizing the country’s policies on women’s rights and criminal justice.
However, the 2018 assassination of dissident journalist Jamal Khashoggi was devastating both for the crown prince’s public relations offensive and for relations with Washington. The fracture intensified after President BidenJoe BidenSaudi Arabia invites Chinese Xi to visit Riyadh: Report Biden attends in-person DNC fundraiser to tout climate agenda Man charged with attempted murder and hate crimes after Asian woman of New York was struck 125 times MOREwho said the assassination should make the kingdom a “pariah”, took office.
During the same period, China’s economic ties with Saudi Arabia have grown closer, with the kingdom supplying 1.76 million barrels of oil per day to the country in 2021, according to the Journal, citing the General Administration of China customs. While the country plans to keep the dollar for the majority of its oil trade, a Saudi switch could create a domino effect for China’s other major oil suppliers, such as Russia, Angola and Iraq.
Saudi Arabia before threatens sell in other currencies in 2019 if Congress passes a bill allowing antitrust liability for OPEC members. The bill, which has been introduced many times over the years, failed again that year.
Tuesday’s report also comes as the United States called on the Saudis to pump more oil to offset soaring gas prices made worse by Russia’s invasion of Ukraine and the United States halted oil imports Russian in response.