RIYADH (Dispatches) -- Saudi and Chinese officials are in talks to price some of the Persian Gulf nation’s oil sales in yuan rather than dollars or euros, The Wall Street Journal reported, citing people familiar with the matter.
The two nations have intermittently discussed the matter for six years, but talks have reportedly stepped up in 2022, with Riyadh disgruntled over the United States’ position regarding a raft of issues.
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 U.S. 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 strengthen its relationship with the Saudis specifically. China previously aided Riyadh in construction of ballistic missiles and consultation on nuclear power.
China’s economic relationship to 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. While the country plans to maintain the dollar for the majority of its oil trading, a shift by the Saudis could create a domino effect for China’s other major oil suppliers, such as Russia, Angola and Iraq.
Saudi Arabia previously threatened to sell in other currencies in 2019 if Congress passed a bill that would allow antitrust liability for OPEC members. The bill, which has been introduced numerous times over the years, failed again that year.
The report also comes as the U.S. has appealed to the Saudis and the Emiratis to pump more oil to offset soaring gas prices compounded by the Ukraine-Russia conflict and the U.S. cutting off Russian oil imports in response.