Yuan settlement of oil, gas, plus communications systems deal etc
Chinese president Xi visited Riyadh and solidified deals including the continued sale of increasing amounts of oil to China. Importantly, he also commented that they would "carry out yuan settlement of oil and gas trade". This seems like another step towards a move away from the US dollar being the reserve currency.
Why is the dollar the reserve currency
The US dollar became the worlds principal (reserve) currency with an agreement after the second world war. All the biggest world powers met at Bretton Woods New Hampshire and agreed that trade in commodities (such as oil and gas) be in US dollars which at that time was itself linked to gold.
Why is the dollar the reserve currency
The US dollar became the worlds principal (reserve) currency with an agreement after the second world war. All the biggest world powers met at Bretton Woods New Hampshire and agreed that trade in commodities (such as oil and gas) be in US dollars which at that time was itself linked to gold.
The geopolitical analyst Peter Zeihan decribes the Bretton Wood deal in this YouTube video time 3mins30sec. One aspect of it is that the USA policed the world's oceans so that nations could trade safely with each other. This is a system which now seems to be breaking down as the political tectonic plates shift and nations form different blocks (eg BRICS). Consecutive crisis continue and the USA is perceived as a diminishing power which is hunkering down by bringing industry back to it's homeland.
See Video time 3mins30secs.
Consequences of the US dollar losing it's status as reserve currency might include a big devaluation, and loss of political power. Sanctions on Russia might become ineffective. One publication, the North State Journal based in North Carolina talks in more detail about the possible gloomy consequences.
Saudi'a cheesed off with Biden now love China
According to the Zero Hedge website, President Xi's deal with Crown Prince Mohammed Bin Salman of Saudi Arabia also includes military and communications deals
The saudi-china story was also picked up on by the Wall Street Journal which noted deepening ties and deals worth $29 Billion Dollars.
When elected , US president closed down his own oil and gas industry including the keystone pipeline. , He then called the Saudi's a pariah state. But oh dear, things got difficult with Covid / Ukraine and a shortage of oil! So Joe Biden went cap in hand to the Saudi's to ask them to increase oil production and keep the price of oil and gas down for his mid term elections back home. It isn't much surprise to see that Biden recieved a less than enthusiastic welcome in Riyadh.