the kingdom should be a \u201cpariah<\/a>\u201d for the killing of Saudi journalist Jamal Khashoggi in 2018. Prince Mohammed, who U.S. intelligence authorities say ordered Mr. Khashoggi\u2019s killing, refused to sit in on a call between Mr. Biden and the Saudi ruler, King Salman, last month.<\/p>\n\n\n\nIt also comes as the U.S. economic relationship with the Saudis is diminishing. The U.S. is now among the top oil producers in the world. It once imported 2 million barrels of Saudi crude a day in the early 1990s but those numbers have fallen to less than 500,000 barrels a day in December 2021, according to the U.S. Energy Information Administration.<\/p>\n\n\n\n
By contrast, China\u2019s oil imports have swelled over the last three decades, in line with its expanding economy. Saudi Arabia was China\u2019s top crude supplier in 2021, selling at 1.76 million barrels a day, followed by Russia at 1.6 million barrels a day, according to data from China\u2019s General Administration of Customs.<\/p>\n\n\n\n
\u201cThe dynamics have dramatically changed. The U.S. relationship with the Saudis has changed, China is the world\u2019s biggest crude importer and they are offering many lucrative incentives to the kingdom,\u201d said a Saudi official familiar with the talks.<\/p>\n\n\n\n
\u201cChina has been offering everything you could possibly imagine to the kingdom,\u201d the official said.<\/p>\n\n\n\n
A senior U.S. official called the idea of the Saudis selling oil to China in yuan \u201chighly volatile and aggressive\u201d and \u201cnot very likely.\u201d The official said the Saudis had floated the idea in the past when there was tension between Washington and Riyadh.<\/p>\n\n\n\n
It is possible the Saudis could back off. Switching millions of barrels of oil trades from dollars to yuan every day could rattle the Saudi economy, which has a currency, the riyal, pegged to the dollar. Prince Mohammed\u2019s aides have been warning him of unpredictable economic damage if he moves ahead with the plan hastily.<\/p>\n\n\n\n
Doing more sales in yuan would more closely connect Saudi Arabia to China\u2019s currency, which hasn\u2019t caught on with international investors because of the tight controls Beijing keeps on it. Contracting oil sales in a less stable currency could also undermine the Saudi government\u2019s fiscal outlook.<\/p>\n\n\n\n
Some officials have cautioned Prince Mohammed that accepting payments for oil in yuan would pose risks to Saudi revenues tied in U.S. Treasury bonds abroad and the limited availability of the yuan outside China.<\/p>\n\n\n\n
The impact on the Saudi economy would likely depend on the quantity of oil sales involved and the price of oil. Some economists said moving away from dollar-denominated oil sales would diversify the kingdom\u2019s revenue base and could eventually lead it to repeg the riyal to a basket of currencies, similar to Kuwait\u2019s dinar.<\/p>\n\n\n\n
\u201cIf it is (done) now at a time of strong oil prices, it would not be seen negatively. It would be more seen as deepening ties with China,\u201d said Monica Malik, chief economist at Abu Dhabi Commercial Bank.<\/p>\n\n\n\n
The Saudis still plan to do most oil transactions in dollars, the people familiar with their talks say. But the move could tempt other producers to price their Chinese exports in yuan as well. China\u2019s other big sources of oil are Russia, Angola and Iraq.<\/p>\n\n\n\n
The Saudi move could chip away at the supremacy of the U.S. dollar in the international financial system, which Washington has relied on for decades to print Treasury bills it uses to finance its budget deficit.<\/p>\n\n\n\n
\u201cThe oil market, and by extension the entire global commodities market, is the insurance policy of the status of the dollar as reserve currency,\u201d said economist Gal Luft, co-director of the Washington-based Institute for the Analysis of Global Security who co-wrote a book about de-dollarization. \u201cIf that block is taken out of the wall, the wall will begin to collapse.\u201d<\/p>\n\n\n\n
Talks with China over pricing oil in yuan started before Prince Mohammed, the de facto leader of the kingdom, made his first official visit to China in 2016, people familiar with the matter said. The crown prince asked the kingdom\u2019s then-energy minister Khalid al-Falih to study the proposal, the people said.<\/p>\n\n\n\n
Mr. Falih instructed Aramco to prepare a memo that heavily focuses on the economic challenges of switching to the yuan pricing.<\/p>\n\n\n\n
\u201cHe really did not think that was a good idea but he could not stop the talks as the ship had already sailed,\u201d said another person familiar with the meetings.<\/p>\n\n\n\n
Saudi officials in favor of the shift have argued the kingdom could use part of yuan revenues to pay Chinese contractors involved in mega projects domestically, which would help mitigate some of the risks associated with the capital controls over the currency. China could also offer incentives such as multibillion-dollar investments in the kingdom.<\/p>\n\n\n\n
Another official familiar with the talks said yuan pricing could give the Saudis more influence with the Chinese and help convince Beijing to reduce support for Iran.<\/p>\n\n\n\n
Ali Shihabi, who sits on the board of Neom and formerly ran a pro-Saudi think tank in Washington, said the kingdom can\u2019t ignore China\u2019s desire to pay for oil imports in its own currency, particularly after the U.S. and EU blocked the Russian central bank from selling foreign currencies in its reserves stockpile.<\/p>\n\n\n\n
\u201cAny doubts countries had about the need to diversify into Yuan and other currencies\/geographies would have ended with that huge step,\u201d Mr. Shihabi tweeted in response to this article.<\/p>\n\n\n\n
https:\/\/www.wsj.com\/articles\/saudi-arabia-<\/a><\/p>\n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"
Talks between Riyadh and Beijing have accelerated as the Saudi unhappiness grows with Washington By Summer Said in Dubai and Stephen Kalin in Riyadh, Saudi Arabia, March 15, 2022 Saudi Arabia is in active…<\/p>\n","protected":false},"author":1,"featured_media":35921,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-35920","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/norkhosq.net\/index.php?rest_route=\/wp\/v2\/posts\/35920","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/norkhosq.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/norkhosq.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/norkhosq.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/norkhosq.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=35920"}],"version-history":[{"count":2,"href":"https:\/\/norkhosq.net\/index.php?rest_route=\/wp\/v2\/posts\/35920\/revisions"}],"predecessor-version":[{"id":35924,"href":"https:\/\/norkhosq.net\/index.php?rest_route=\/wp\/v2\/posts\/35920\/revisions\/35924"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/norkhosq.net\/index.php?rest_route=\/wp\/v2\/media\/35921"}],"wp:attachment":[{"href":"https:\/\/norkhosq.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=35920"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/norkhosq.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=35920"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/norkhosq.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=35920"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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