Article Image

IPFS News Link • Saudi Arabia

Saudis in Potential Deal with China that Would Topple US Dollar as Reserve Currency

•, by JW Williams

The US dollar is the world's reserve currency due in large part to the US petrodollar in which oil producers would sell their product to the US (and the rest of the world) for dollars, which they would then recycle the proceeds in dollar-denominated assets and while investing in dollar-denominated markets.

However, this system that backed the US as world's dominant superpower is coming to an end. Saudi Arabia is in active talks with Beijing to price its some of its oil sales to China in yuan. Saudi Arabia, the world's largest crude oil exporter, is shifting toward Asia after disappointment in Biden's withdrawal from Afghanistan and lack of US support in the Saudi's war with Yemen. Saudi leaders recently beheaded 81 people.

As a result of the invasion of Ukraine, China is the world's No. 1 importer of oil and the biggest trading partner for Saudi Arabia, which is the largest oil exporter globally.

The shift to the east strikes a blow at the US petrodollar. China buys more than 25% of the oil that Saudi Arabia exports, and if priced in yuan, those sales would boost the standing of China's currency, and set the Chinese currency on a path to becoming a global petroyuan reserve currency.

The West's support for the conflict in Ukraine is not only knocking the US off its position as the top economic superpower, but the UK has also damaged its economy by vowing to stop importing Russian fuel by 2023; Russia supplies 4% of the UK's gas and 8% of Britain's oil. British PM Boris Johnson is preparing to spend billions of pounds to subsidize the heating bills of millions of British families as prices are set to rise.

Free Talk Live