Top oil producer distances itself from petrodollar hegemony
FILE PHOTO © Getty Images / Lintao Zhang
Saudi Arabia is considering selling some of its oil to China in yuan rather than dollars, people familiar with the matter told the Wall Street Journal on Tuesday, citing “active talks” between Riyadh and Beijing. Such a move could further marginalize the petrodollar paradigm that has controlled the global financial system for over half a century, placing the dollar’s status as the international reserve currency at risk.
China buys over a quarter of the oil exported by Saudi Arabia, meaning that denominating those deals in yuan would significantly boost the international profile of the Chinese currency. Currently, 80% of global oil sales are transacted in dollars, with the Saudis trading exclusively in the US currency since 1974 – when Washington offered Riyadh security guarantees in exchange for its loyalty to the petrodollar system.