Post by account_disabled on Mar 9, 2024 9:13:16 GMT 1
With Chinese President Xi Jinping's visit to Saudi Arabia this week, rumors are increasing about the possible adoption of the yuan as a payment currency in the purchase of oil.
The trip marks a historic milestone in relations between China and Arab countries and also raises hopes of further deepening energy ties in the coming years.
The more frequent use of the currency to replace the dollar stands out on the Chinese government's agenda. In a report titled “Chinese-Arab Cooperation in the New Era,” which the Chinese Ministry of Foreign Affairs published on December 3, it is noted that it is of interest to strengthen monetary cooperation with the central banks of Arab countries and discuss the settlement of payments and exchange of currencies between the two parties.
The report also advocates building a mutually beneficial long-term strategic energy partnership that includes oil and gas, nuclear power and clean energy.
China is Saudi Arabia's largest trading partner, with bilateral trade worth $87.3 billion in 2021. Additionally, Saudi Arabia is China's largest oil supplier, accounting for 18% of total crude oil purchases, with imports for a total of 73.76 million tons in the first 10 months of 2022, worth $55.52 billion, according to Chinese customs data.
Talks about oil contracts in Ecuador Mobile Number List yuan have been going on for years, but it is in 2022 when it seems that they are going to materialize in a context in which the hegemony of the dollar is being attacked and in which India seems not to be so aligned on the US side as could be expected. If those talks manage to price some of Saudi Arabia's oil sales to China in yuan, it would be a big step that would reduce the dollar's dominance in the global oil market. In fact, it could perhaps even pave the way for the establishment of a payment system parallel to the Western one in which the yuan has the same relevance as the dollar.
However, today, approximately 80% of oil sales are made in dollars and the Saudis have traded oil exclusively in dollars since 1974 as part of an agreement with the Nixon administration that included security guarantees for the country. .
On the other hand, the situation with Russia and the limitation of the purchase price of its oil for Europe, the US and its allies also facilitate the adoption of the yuan.
Trade in yuan and rubles totaled 185 billion yuan ($26.27 billion) in October, more than 80 times the volume recorded in February when the conflict between Russia and Ukraine began, according to Reuters data this week.
Bilateral trade between Russia and China is on track to hit a new high this year. In the first 10 months of 2022, bilateral trade totaled 153.94 billion, 33% more year-on-year.