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Saudi Arabia Considers Using Yuan Instead of US Dollars for Chinese Oil Sales

Saudi Arabia Considers Using Yuan Instead of US Dollars for Chinese Oil Sales

Saudi Arabia is in active talks with Beijing to price some of its oil sales to China in yuan, according to the US newspaper of “The Wall Street Journal”.

The aforementioned step would reduce the US dollar’s dominance of the global oil market, the step is considered as another shift by the world’s largest crude oil exporter towards Asia.

The sources mentioned through The Wall Street Journal said that talks with China over oil contracts priced in yuan were halted six years ago, but accelerated this year.

However, a relevant Saudi source on energy told (Al- Arabia) that the Wall Street report is skeptical.

This step is not raised for the first time, as China submitted a draft oil contract priced in yuan in 2018 to the Gulf exporter, as part of its efforts to make its currency tradable around the world, but it stopped suddenly before accelerating this year on the impact of political developments.

On the other hand, a related Saudi source denied the authenticity of the news and said that the news is “unfounded, and the issue was not raised or discussed,” doubting the American newspaper’s sources and information.

Nearly 80 percent of global oil sales are made in dollars, and the Saudis, the world’s largest exporter, have been selling oil exclusively in dollars since 1974, in a deal concluded by the Nixon administration that included security guarantees in favor of Saudi Arabia.

China buys more than 25% of the oil that Saudi Arabia exports. If priced in yuan, these sales will boost the Chinese currency’s position.

A few days ago, Saudi Aramco, the world’s largest oil producer, entered into an investment partnership to develop a facility that includes a major refinery and an integrated petrochemical complex in northeastern China.

Aramco Hwajin Petrochemical Company, a joint venture between the Saudi oil giant, North Hwajin Chemical Industries Group, and Panjin, which was established in December 2019 – will develop the liquid-to-chemicals complex.

The complex will include a refinery with a production capacity of 300,000 barrels per day, and an ethylene cracker unit, which is a petrochemical basis for the manufacture of thousands of daily products.

The facility, which will be built in Panjin, Liaoning Province, China, will contribute to meeting the growing demand for energy and chemical products in China.

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