Report: Saudi Arabia considers accepting China’s Yuan instead of the US dollar for oil sales

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 sources familiar with the matter.

The two nations have had on and off discussions regarding the matter for six years, but talks have reportedly stepped up in 2022, with Riyadh angry over the United States’ nuclear negotiations with Iran and its lack of backing for Saudi Arabia’s military operation in neighboring Yemen.

Close to 80 percent of global oil sales are priced in dollars, and since the mid-1970s the Saudis have exclusively used the dollar for oil trading as part of a security agreement with the U.S. government, according to the Wall Street Journal.

The talks are the most recent in an ongoing effort by Beijing both to make its currency tradeable in international oil markets and strengthen its relationship with the Saudis specifically. China previously assisted Riyadh in construction of ballistic missiles and offered consultation on nuclear power.

Issues between the US and Saudi Arabia have existed for some time, such as when the Trump administration refused to respond to a massive 2019 attack on Saudi oil facilities, ties between the two allies worsened under US President Joe Biden.

While campaigning, Biden pledged to make Saudi Arabia the “pariah that they are” for the murder of Middle East Eye journalist Jamal Khashoggi in 2018. Shortly after being sworn in, Biden ruled out dealing directly with the country’s ruler, Crown Prince Mohammed bin Salman, who US intelligence authorities say ordered Khashoggi’s killing.

Last month, as the administration attempted to get Gulf states to increase oil production, the crown prince reportedly rejected the offer of a phone call from the US president, the Journal reported.