Russia was suffocated by sanctions, and China and Saudi Arabia were scared to death. (The Associated Press, AFP, Archyde.com, this newspaper combined)
The petrodollar system has ensured America’s dominant position in international finance. (file photo, ouxin)
Hussein wants to trade crude oil in euros, draws U.S. dissatisfaction
[Financial Channel/Comprehensive Report]The U.S. dollar has become an international currency mainly because it has dominated the global oil trade since the end of World War II. The petrodollar system has ensured the United States’ leading position in international finance. Historically, countries that challenged the petrodollar system have often led to confrontations in the United States.
In 2009, Robert Fisk, an economic reporter for the British “Independent”, pointed out in an analysis article that the reason why the U.S. military attacked the Hussein regime in Iraq was that, although the blatant invasion of Kuwait and the blatant grab for oil were the fuse, the underlying reason was that , Hussein participated in a “conspiracy” to challenge the petrodollar system and try to establish a pricing system with the euro.
Back in the present, the US dollar is still the main international currency, but recently central banks have begun to question whether it is wise to rely too much on the US dollar to “put all eggs in one basket”.
Saudi Arabia is speeding up talks with China to accept the use of the yuan as an alternative to the dollar to buy oil, among other things. (file photo, ouxin)
Saudi Arabia is China’s largest crude oil supplier, with about 1.76 million barrels per day
Why do central banks start to have this doubt? Since the conflict between Russia and Ukraine, the United States has successively taken “unacceptable and unheard of measures” to sanction Russia, including immediately freezing the foreign exchange reserves of the Russian Central Bank, removing Russia from SWIFT (Society for Worldwide Interbank Financial Telecommunication), and sanctioning Russia’s energy exports Wait.
At this time, it happened coincidentally that Saudi Arabia was speeding up negotiations with China to accept the possibility of using the yuan to buy oil in lieu of the dollar. Almost all global oil transactions are currently denominated in dollars, but Saudi Arabia’s move has undoubtedly prompted governments to start thinking about whether to get rid of the dollar. About 80% of global oil sales are in dollars. Since 1974, Saudi Arabia has reached an agreement with the Nixon administration of the United States to trade oil in dollars, including oil transactions with China, which are also priced in dollars. Saudi Arabia became China’s largest oil supplier last year, with sales of 1.76 million barrels per day.
Negotiations between China and Saudi Arabia over a yuan-denominated oil contract have been on and off for six years, but this year has accelerated the process. (File photo, Midland)
Saudi-US relations deteriorate due to Yemen civil war
Why would Saudi Arabia start thinking about selling oil to China in renminbi? Negotiations between China and Saudi Arabia over a yuan-denominated oil contract have been on and off for six years, but have accelerated this year as Saudi Arabia has grown increasingly unhappy with U.S. security commitments. Saudi Arabia is reported to be unhappy that the United States does not support its intervention in the civil war in Yemen, and it is also angry that the US government is trying to reach a nuclear deal with Iran.
In addition, the Chinese government continues to provide incentives to Saudi Arabia, such as assisting Saudi Arabia in building ballistic missiles, providing advice on nuclear programs, etc., coupled with the continued deterioration of relations between the United States and Saudi Arabia, has led to accelerated Saudi Arabia Utah-China oil deal.
China buys more than 25 percent of Saudi Arabia’s oil, and those sales, when denominated in yuan, will boost the yuan’s status and set it on the path to becoming the world’s leading oil reserve currency. Saudi Arabia’s action may weaken the dollar’s hegemony in the international financial system. Qatar’s foreign minister said that the conflict between Russia and Ukraine and other geopolitical influences are driving some countries to explore new ways to price oil.
Russia refuses “unfriendly countries” to pay for gas supplies in dollars, euros, all in rubles. (File photo, Bloomberg)
Russia asks to pay for gas in rubles
After the war between Russia and Ukraine, Russia recently responded to sanctions and decided to refuse “unfriendly countries” to pay for natural gas supplies in dollars and euros, all in rubles, and even said that if the above-mentioned countries refused to pay for Russian natural gas exports in rubles, the world would face bankruptcy. .
Russia is the third largest oil producer in the world after Saudi Arabia and the United States, and the Russian economy is very dependent on energy exports. Russia has earlier warned that in response to the oil ban, Russia may stop exporting natural gas, with “catastrophic” results for countries.
How to say? In addition to the high global oil and energy prices, for Europe, Europe is quite dependent on Russian energy. Although countries are currently emphasizing that they will get rid of their dependence on Russia by 2030, most of the outside world is not optimistic. It is no wonder that Russia is so Make these decisions confidently.
The veteran American diplomat Ji Xinji once said: “Whoever controls oil controls all countries, whoever controls currency controls the whole world, and whoever controls food controls all mankind.” (File photo, Midland)
U.S. dollar could face collapse if it loses oil-dollar support
Henry Kissinger, a veteran American diplomat, once said: “Whoever controls oil controls all countries, whoever controls money controls the world, and whoever controls food controls all mankind.”
“The oil market, and even the entire global commodity market, is backed by the dollar as a reserve currency,” Luft said. “If you take that brick out of the wall, the wall will start to crumble.
Therefore, no matter how huge the dollar is, if the supply of the dollar remains unchanged, once a country reduces the use of the dollar, the value of the dollar will decrease; if the number of countries that reduce the use of the dollar increases, it will affect the dollar’s status as a powerful international currency. .
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