Eurasia Center Brief Analysis EC/2022/16. – Saudi Arabia: Yuan instead of dollars?


China is the world’s largest importer of oil, which could decrease the global dominance of the dollar. It is no secret that Beijing intends to push back against the dominance of the U.S. dollar in a small way by promoting yuan-denominated oil deals. This is not the first time China has tried to buy oil in yuan rather than dollars, and it may now have found a willing seller. Saudi Arabia, which sells a quarter of its exports to China, is currently considering making those sales in yuan. Negotiations have been in progress for half a decade, at varying levels of intensity, but have so far failed to produce any results. On the one hand, Saudi Arabia has pegged its own currency, the riyal, to the dollar, meaning that any unwanted weakening of the dollar would also affect its own currency. But U.S. geopolitical hegemony rests so heavily on the petrodollar that the problem is pervasive. What would the world look like if the petroyuan became the oil industry’s currency of choice?

Keywords: China, Saudi Arabia, trade, dollars, yuan

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