Bandar Al-Khorayef, a senior Saudi official, has stated that Saudi Arabia is open to exploring new ideas, including the possibility of using China’s yuan for crude oil transactions. This move is part of the country’s broader strategy to diversify its economy and deepen ties with China, according to the South China Morning Post.
Al-Khorayef highlighted that Saudi Arabia will prioritize its interests and pursue new opportunities, distinguishing between political and commercial considerations. The potential increased use of the “petroyuan” represents a significant advancement in the yuan’s global presence, posing a challenge to the dominance of the US dollar in global commodity markets.
China has actively promoted the yuan for international trade, including through a currency swap agreement with Saudi Arabia and a preference for local currency settlements with its trade partners.
The predominant use of the US dollar in oil transactions, generating petrodollars, has reinforced its status as the global reserve currency.
In recent years, Saudi Arabia and China have strengthened their relationship. Huawei, a major Chinese telecommunications company, has expanded its presence in the Middle East by establishing a cloud data center and offering automation expertise.
Additionally, Saudi Arabia’s civil aviation regulator has been exploring potential collaborations with various aerospace suppliers, including Chinese firms, to innovate in the aviation industry. This includes a recent agreement with a Chinese aircraft manufacturer aimed at localizing the aviation sector and enhancing the local supply chain.
