China And Russia Move To Disrupt The Dollar’s Dominance In Oil Markets | OilPrice.com

- Sep 13, 2022, 5:00 PM CDT

China has long regarded the position of its renminbi currency in the global league table of currencies as being a reflection of its own geopolitical and economic importance on the world stage.The long-mooted prospect of the end of the U.S.

Russia itself has long held the same view on the advantages for it of removing the U.S. dollar’s hegemony in global hydrocarbons pricing, but, while China was unwilling to overtly challenge the U.S. during the height of its Trade War under the highly unpredictable former U.S. President Donald Trump, it could do little about it on its own. A sign of Russia’s intent, though, came just after the U.S.

The further expansion of other currencies – realistically only the RMB – to subvert the dominance on U.S. dollar-pricing of oil and other hydrocarbons is also dependent on the currency’s use in countries other than those already under U.S.-led sanctions. Happily, for China, another leader of the Middle Eastern world – Saudi Arabia - has shown very willing to expand its RMB-dominated business with China, including as payment for oil supplies.

Given that the vast majority of Saudi government borrowing in the previous few years has been denominated in U.S. dollars, a switch away from USD-funding would allowed Saudi more flexibility in its overall financing structure, albeit after an initial dislocation connected to itscurrency peg to the U.S. currency. In the past few months, there has certainly been a noticeable further shift by Saudi Arabia towards China, as exclusively catalogued by OilPrice.com.

Source: Financial Digest (financialdigest.net)

LukeGromen

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