The world’s biggest importer of oil, China will not accept indefinitely to buy it in dollars, according to economist Carl Weinberg. Saudi Arabia would then be compelled to label its sales in yuan, bringing with it the rest of the market.
Should the end of the dollar era be clarified? In an interview with US media CNBCon October 11, economist Carl Weinberg detailed several factors that he said tipped the balance in this direction.
He noted in particular that the emergence of China as the world’s largest importer of oil is likely to upset the situation regarding the petrodollar. Carl Weinberg believes that in the near future, Beijing will seek to buy black gold with its own currency, without having to go through the US currency.
A desire that Saudi Arabia, one of the world’s leading oil exporters, can hardly ignore, and that could create a domino effect. “I think oil pricing in Yuan will happen, and as soon as the Saudis accept it – which the Chinese will force them to do – the rest of the oil market will follow,” analyzes the economist.
Since 1974 and an agreement between US President Richard Nixon and King Faisal of Saudi Arabia, the kingdom – like the overwhelming majority of producing countries – is only selling dollars in oil.
But in recent years, a new dynamic is emerging. As of 2012, Iran has begun to agree to sell its gas and oil in Yuan, followed by Russia in 2015. In response to the financial sanctions imposed by Washington against Caracas, Venezuela did the same on September 15. A few days earlier, it was Beijing that had announced the launch of futures contracts for sales of crude oil denominated in Chinese yuan and convertible into gold. Waiting for Saudi Arabia?