Biden’s Middle East: Saudi Arabia Embraces China; Will They Topple the Dollar?

by Judith Bergman, GATESTONE  •  April 20, 2022

• If Saudi Arabia were to break the tradition of pricing its oil in US dollars, as it is contemplating doing, others could well start to price oil in Chinese yuan or other currencies — negatively affecting the US dollar’s status and potentially the entire US economy.
• “China must brace for a full-blown escalation of the struggle with the United States and prepare to gradually decouple the Chinese yuan from the US dollar.” — Zhou Li, former deputy director of the Communist Party’s International Liaison Department, South China Morning Post, July 5, 2020.
• That Saudi Arabia now seems to be seriously considering selling its oil in yuan signifies the extent to which the Biden administration’s Middle East policies have left countries such as Saudi Arabia hedging their bets on China, as the ascendant power in the Middle East. China, on the other hand, is simply taking advantage of the current US administration’s deprioritization of the region and its alienation of strategic US allies such as Saudi Arabia.
• That alienation has mainly come, according to reports, because of Saudi “security concerns” — a diplomatic euphemism, presumably, for America’s enabling Iran to acquire nuclear weapons. This game-changer is doubtless seen by Saudi Arabia and other oil-rich Sunni Gulf states, as a mortal danger.
• The vacuum that the US left behind — the second one after Afghanistan — is rapidly being filled by China.
• The Belt and Road Initiative (BRI) initiative seeks dramatically to enhance China’s global influence from East Asia to Europe by making countries worldwide increasingly dependent on China. China has signed cooperation agreements with 19 Arab countries for construction projects under the BRI.
• China is also Saudi Arabia’s largest trading partner — an arrangement that extends to military cooperation….
• In August 2021, the fifth China-Arab States Expo took place in China; during it, agreements worth an estimated $24 billion in investments between China and Arab countries were made.

If Saudi Arabia were to break the tradition of pricing its oil in US dollars, as it is contemplating doing, others could well start to price oil in Chinese yuan or other currencies — negatively affecting the US dollar’s status and potentially the entire US economy. (Image source: iStock)<
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Saudi Arabia is considering selling oil to China — which buys more than 25% of Saudi oil exports — in exchange for yuan (China’s currency), according to a recent report by the Wall Street Journal. The move would be unprecedented. Saudi Arabia, ever since its 1974 agreement with US President Richard Nixon, has been selling oil in exchange for US dollars.

The change, if realized, would be significant. The status of the US dollar, including as the world’s reserve currency, depends on its dominance of global markets, especially the oil market, where 80% of sales are done in US dollars. If Saudi Arabia were to break the tradition of pricing its oil in dollars, as it is contemplating doing, others could well start to price oil in yuan or other currencies — negatively affecting the US dollar’s status and potentially the entire US economy.

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