The dominance of the American dollar (US) will begin to shift. This is in line with China and Saudi Arabia's plans to use the yuan for global oil trade.
Deutsche Welle (DW) reported on Wednesday (23/3) that Saudi Arabia sells a third of its oil exports to China and since the beginning of the year the country has overtaken Russia as the biggest oil source.
Oil transactions using the yuan will help create a counter system in international payments, in which the Chinese currency will be as important as the US dollar.
The deal with Saudi Arabia became relevant amid Russia's invasion of Ukraine. The reason is, Moscow can avoid US sanctions, if it adopts the yuan for foreign transactions. China has always insisted on being neutral. However, the US and Europe suspect Beijing is secretly helping Russia.
However, analysts believe the Saudi announcement to adopt the yuan is a warning to the west.
The European foreign policy research institute, EFCR, noted that Saudi Arabia had used a similar method in 2019.
China is often used as a bargaining chip in its relations with the United States. For example, just months after the murder of Saudi journalist Jamal Khashoggi, crown prince Prince Mohammed bin Salman used his Asian tour to influence debate in the US and Europe over arms sales to his country.
Relations between Saudi Arabia and the United States have cooled since the Joe Biden administration, especially regarding human rights crimes in Yemen. Following Russia's invasion, the US and Europe tried to enlist the support of the gulf countries to increase oil production. But the request was rejected.
"The gulf countries believe that Washington's bargaining power or pressure has weakened a lot compared to before. They are worried that the Middle East is no longer considered important," said Cinzia Vianco, Middle East researcher at ECFR. "
This concern is an entry point for China. In recent years, Beijing has slowly strengthened trade relations with Saudi Arabia. By 2020, Riyadh will become China's largest trading partner in the Gulf region.
The bamboo curtain country also plays an important role in the future modernization project launched by bin Salman, Vision 2030. This giant project wants to prepare Saudi Arabia to welcome the end of the oil era, including through infrastructure development.
Meanwhile, Russia will use the ruble for gas sales transactions to countries that are not friendly to Russia.
Russian President Vladimir Putin said European gas prices had soared on fears a supply shortage was exacerbating the region's energy crisis.
"If you want our gas, buy our currency. The change will only affect the payment currency, which will be converted into Russian rubles," he said.
Russian gas accounts for about 40% of total European consumption. EU gas imports from Russia this year fluctuated between 200 million to 800 million euros, equivalent to US$ 880 million per day.
"Russia will continue, of course, to supply natural gas according to volumes and prices, staying within the previously agreed contracts," Putin said.
European countries and the United States have imposed tough sanctions on Russia since Moscow sent troops to Ukraine on February 24. But Europe relies heavily on Russian gas for heating and electricity generation, and the EU is divided over whether to sanction Russia's energy sector.
The ruble briefly jumped after the surprise announcement to a three-week high past 95 against the dollar. It pared gains but remained well below 100, closing at 97.7 against the dollar, down more than 22% since Feb. 24.
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