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China Will "Compel" Saudi  Arabia to Trade Oil in Yuan
China Will "Compel" Saudi  Arabia to Trade Oil in Yuan

China Will "Compel" Saudi Arabia to Trade Oil in Yuan

China Will "Compel" Saudi Arabia to Trade Oil in Yuan

China will "compel" Saudi Arabia to trade oil in yuan and, when this happens, the rest of the oil market will follow suit and abandon the US dollar as the world's reserve currency, a leading economist told CNBC.
Carl Weinberg, chief economist and managing director at High Frequency Economics, said Beijing stands to become the most dominant global player in oil demand since China usurped the US title of "biggest oil importer on the planet."
Saudi Arabia has "to pay attention to this because even as much as one or two years from now, Chinese demand will dwarf US demand", Weinberg said.
"I believe that yuan pricing of oil is coming and as soon as the Saudis move to accept it—as the Chinese will compel them to do—then the rest of the oil market will move along with them."
In recent years, several nations opposed to the dollar being the world's reserve currency have progressively sought to try and abandon it. For instance, Russia and China have sought to operate in a non-dollar environment when trading oil. Both countries have also increased their efforts to mine and acquire physical gold if, or perhaps when, the dollar collapses.
In recent years, China has sought to ratchet up the pressure on Saudi Arabia over the form of currency in which their oil trade is conducted, with Riyadh now enjoying less and less oil purchases from Beijing.
When asked what it could mean for the dollar should the oil market move trade out of the US currency and into the yuan, Weinberg said the world's transaction currency would suffer "lesser demand for US securities across the board".
"Moving oil trade out of dollars into yuan will take right now between $600 billion and $800 billion worth of transactions out of the dollar … (That) means a stronger demand for things in China, whether it's securities or whether it's goods and services. It is a growth plus for China and that's why they want this to happen."

 

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