The status of the American dollar as the world’s most influential and most powerful currency is coming to an end, as Saudi Arabia’s move to allow the use of the yuan for Chinese oil sales is widely seen as a signal that the petrodollar is weakening.
In an article for the Wall Street Journal, journalists Summer Said and Stephen Kalin reported that Saudi Arabia is currently in negotiations with Beijing to price some of its oil sales to China in yuan rather than in U.S. dollars. People familiar with the talks said such a move would dent the dollar’s dominance in the global petroleum market and international finance.
“Why is that a big deal? Seems like a little old financial story,” commented Fox News anchor Tucker Carlson during an episode of his show on the network. “Well, because it would spell the end of the petrodollar.”
Saudi Arabia, and many other oil-exporting nations have long used the U.S. dollar during oil sales. Benchmarks in the global oil market even gauge the price of oil using the U.S. dollar. As Carlson explained, the massive influence of the petrodollar on the global oil industry has had a significant positive effect on the American economy, and is “one of the keys to the United States’ wealth.”
The petrodollar “is one of the key reasons the United States has the highest standard of living of any big country in the world despite the fact that our manufacturing sector long ago collapsed,” said Carlson.
“You may have wondered, ‘How’d that work? Why are we still so rich?” Well, this is how,” he continued. “Petrodollars allow our government, in short, to spend money that we don’t have – and that money pays for an awful lot of what we [do] have. Healthcare, retirements, the military, we could go on – everything, essentially.”
If the Saudi government pushes forward with its deal with China, it could effectively signal the beginning of the end of the supremacy of the American dollar not just in the oil industry but also in the international financial system. (Related: COUNTDOWN to collapse of the petrodollar… America’s dollar dominance is coming to a sudden, catastrophic end… total CHAOS will follow.)
“The oil market, and by extension the entire global commodities market, is the insurance policy of the status of the dollar as reserve currency,” noted Gal Luft, an economist and co-director of the Washington think tank the Institute for Analysis of Global Security. Luft is also an expert on what is known as “de-dollarization,” or the process by which the U.S. dollar is substituted as the main currency for trade.
“If that block is taken out of the wall, the wall will begin to collapse,” he concluded.
“What’s the wall? Well, it’s the U.S. economy,” said Carlson. “Not a small story, maybe even a bigger story than the invasion of Ukraine. Weird that we’re not talking about it.”
According to the Wall Street Journal, the finalization of the deal between the Saudis and Beijing on the use of the yuan would be a milestone in the kingdom’s pivot to strengthen ties with Asia at the expense of its Western allies.
Saudi Arabia’s relationship with the U.S. has been deteriorating since the beginning of President Joe Biden’s term. During his campaign, he called for the kingdom to be turned into a “pariah state” for the killing of Saudi journalist Jamal Khashoggi in 2018.
The Saudis are also reportedly angry at Biden for refusing to provide more support to the kingdom in its intervention in the Yemeni Civil War. The Saudis are also reportedly furious at Biden for attempting to strike a deal with Iran over its nuclear program.
But America and the kingdom have been distancing themselves from each other even before Biden took office. In the early 1990s, the U.S. once imported more than two million barrels of Saudi crude oil a day. Now, as America has turned into one of the top oil-producing countries in the world, those numbers have fallen to less than 500,000 barrels a day in Dec. 2021.
China has been taking over America here. The communist nation’s oil imports from Saudi Arabia have swelled over the last three decades to around 1.76 million barrels a day in late 2021.
“The dynamics have dramatically changed. The U.S. relationship with the Saudis has changed, China is the world’s biggest crude importer and they are offering many lucrative incentives to the kingdom,” said a Saudi official. “China has been offering everything you could possibly imagine to the kingdom.”
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