Saudi and Chinese officials are in talks to price some of the Gulf nation’s oil sales in Yuan rather than dollars, the Wall Street Journal reported Tuesday, citing people familiar with the matter.
The two countries have been in discussions about yuan-priced oil contracts since at least 2016, but they have advanced recently on the back of growing Saudi concerns over Washington’s commitment to the kingdom’s security.
The Biden administration is in the final stages of negotiations with Iran aimed at reviving the 2015 nuclear deal. Riyadh opposed the original agreement and backed the Trump administration’s decision to withdraw from the accord in 2018, which saw Washington impose debilitating sanctions on Tehran.
Like other countries in the region, the Saudis have perceived the chaotic US withdrawal from Afghanistan and Washington’s renewed focus on great-power rivalry with China and Russia as indications of a wider US disengagement from the region.
While many of these issues have been festering for years, such as when the Trump administration refused to respond to a massive 2019 attack on Saudi oil facilities, ties between the two allies hit new lows under US President Joe Biden.
On the campaign trail, Biden pledged to make the oil-rich kingdom the “pariah that they are” for the murder of Middle East Eye journalist Jamal Khashoggi in 2018.
However, the 2018 assassination of dissident journalist Jamal Khashoggi has been catastrophic for both the crown prince’s public relations offensive and relations with Washington. The rift intensified after President Biden, who has said the assassination should make the kingdom a “pariah,” took office.
During the same period, China’s economic relationship to Saudi Arabia has grown closer, with the kingdom providing 1.76 million barrels of oil a day to the country in 2021, according to the Journal, citing China’s General Administration of Customs. While the country plans to maintain the dollar for the majority of its oil trading, a shift by the Saudis could create a domino effect for China’s other major oil suppliers, such as Russia, Angola and Iraq.
Saudi Arabia previously threatened to sell in other currencies in 2019 if Congress passed a bill that would allow antitrust liability for OPEC members. The bill, which has been introduced numerous times over the years, failed again that year.
The report Tuesday also comes as the U.S. has appealed to the Saudis to pump more oil to offset soaring gas prices compounded by Russia’s invasion of Ukraine and the U.S. cutting off Russian oil imports in response.
Sources: Middle East Eye, The Hill