The Wall Street Journal reported the above information on March 15, citing a source from "positive negotiations" between Riyadh and Beijing. According to the newspaper, such a move could hurt the petrodollar model - selling oil in USD that has controlled the global financial system for more than half a century - affecting the USD's position as an international reserve currency.
China buys more than a quarter of Saudi Arabia's oil exports, meaning converting those transactions into yuan would significantly boost the international nature of the Chinese currency. Currently, 80% of global oil sales are traded in USD, with Saudi Arabia monopolizing US currency since 1974 - when Washington offered security guarantees to Riyadh in exchange for its commitment to the US dollar system.
While China and Saudi Arabia have discussed the valuation of oil contracts in yuan for the past six years, these recent negotiations have rapidly increased the frequency due to Saudi Arabia's dissatisfaction with the US government's policies.
From Washington's growing efforts to stay away from the Saudi-led war in Yemen, which has dragged the already poorest country in the Middle East into a serious humanitarian disaster, to condemning Prince Mohammed bin Salman (MBS) for the murder of journalist Jamal Khashoggi, Riyadh feels disappointed with Washington's security commitments to the kingdom, according to the Wall Street Journal.
Prince Mohammed bin Salman is said to have rejected Mr. Biden's calls earlier this month as the US leader sought cheaper oil and gas as US gas prices soared to near-record highs amid the Russia-Ukraine military conflict.
Mr. Biden is said to be planning a trip to Saudi Arabia at the end of this spring in an effort to heal relations.
Western sanctions against Russia aim to push Moscow out of the global financial system, causing countries like China - which are already on some of the sanctions list - to actively seek ways to ensure that what happened to Russia cannot happen to them.
If Saudi Arabia successfully sells oil to China in yuan, the move could be imitated by other major Chinese fuel suppliers - Angola and Iraq, as well as Russia.
