Saudi Arabia might be forced to trade oil in Yuan in the near future, leading the rest of the oil market to
follow and making the US dollar lose the 1st place as “the world's reserve currency”.
This is Carl Weinberg’s forecast, chief economist and managing director at High Frequency Economics. He
said that the People's Republic of China was considered the most dominant driver in oil demand since
becoming the largest oil importer on Earth, and warned Saudi Arabia to pay close attention to this matter
because Chinese demand could possibly dwarf U.S. demand in the next two years.
"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," he appraised.
China intended to increase the volume of transactions with oil in yuan to raise the demand in purchasing its
securities and goods, as well as reducing the influence of the Greenback. Weinberg also mentioned that
Russia aimed to move away from the US Dollar as the leading currency in paying for oil supplies, and had
already concluded agreements with China on the issue. Both countries also increased their efforts to mine
and collect physical gold.
“In January 2017, Russia, the world's second-largest oil exporter, agreed to pay for oil supplies in yuan.
China actively promotes the process of paying oil in RMB using futures contracts for future oil deliveries in
yuan, secured by gold.”
Weinberg judged that China will import more and more oil from countries as its car production along with
other industries will sharply develop (the country is now annually producing 30 million cars), and the fact
that the PRC is compelled to purchase oil in dollars has become unacceptable to Beijing. China will seek
ways to drive pressure on Saudi Arabia via the form of currency to trade oil.
When asked what would happen to the Greenback given the oil market switching to trade in Yuan, the chief
economist appraised that the world's most popular currency could suffer less demand for U.S. securities.
"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. It 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."