Saudi Arabia Could Shift Focus to Chinese Yuans Instead of Dollars for Oil Deals

In a significant shift for the BRICS alliance, Saudi Arabia is reportedly considering trading oil in China's yuan instead of the US dollar.

According to the Atlantic Council, this move could signal the end of the petrodollar era, which has been a cornerstone of global oil trade for the past 50 years.

Back in 1974, Saudi Arabia agreed to use the dollar for all its oil transactions, reinforcing the dollar’s status in the global economy and benefiting the Saudi economy. However, current data suggests that increased cooperation within BRICS could become more likely if Saudi Arabia abandons the petrodollar.

The introduction of the petrodollar in the 1970s helped establish the US as a global economic leader. However, the landscape has changed significantly since then, with America’s share of global GDP dropping from 40% in 1960 to 25% today. Concurrently, the US has reduced its dependence on Saudi oil due to a surge in domestic production, while seeking to strengthen trade ties with China.

Saudi Arabia’s potential shift to the yuan aligns with China’s position as the kingdom’s largest oil buyer, accounting for over 20% of its exports. This move could further the BRICS bloc’s goal of de-dollarization, which has gained momentum over the past year. Saudi Arabia, which has shown interest in joining BRICS, has already accepted an invitation to join the group, though its membership is not yet finalized.

Kosta Gushterov