"Saudi Arabia is in active talks with Beijing to price some of its oil sales to China in yuan, people familiar with the matter said, a move that would dent the U.S. dollar’s dominance in the global petroleum market and mark another shift for the world's top crude exporter towards Asia," said Smith, quoting a report from the Wall Street Journal. (Related: PETRODOLLAR PUKES: Cracks emerge in U.S. dollar dominance as Saudis consider accepting Chinese currency for oil sales to Beijing)
"The talks [with] China over yuan-priced oil contracts have been on and off for six years, but have accelerated this year as the Saudis have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom."
Smith said the story is a big one as it may represent the total destruction of the petrodollar and the collapse of the American currency.
"People say China buys more than 25 percent of the oil that Saudi Arabia exports. If priced in yuan, those sales would boost the standing of Chinese currency. The Saudis are also considering a yuan-dominated future contract known as the petroyuan in the pricing model of Saudi Arabian oil company, also known as Aramco," Smith added.
According to Smith, America's oil interests are basically the reason the Middle East kingdom exists entirely.
He noted that Saudi Arabia had the good sense to team up with people like the Bushes and other oil magnates in America, which guaranteed they could have total despotic control over their religious monarchy, as long as the U.S. got their precious oil.
However, Smith said, it's now coming apart – thanks to the mismanagement of the Democrats.
The Saudis are said to be furious over the lack of support from the U.S. for their intervention in the Yemen civil war and the Joe Biden administration's attempt to make an agreement with Iran over its nuclear program. Saudi officials have said they were stunned by the abrupt U.S. withdrawal from Afghanistan last year.
A shift to a petroyuan system would be a serious change for Saudi Arabia to price even some of its 6.2 million barrels per day of crude exports in anything other than dollars. The vast majority of global oil sales are made in dollars. The Saudis have traded oil solely in dollars since 1974 in a deal with the Richard Nixon administration that involved security guarantees for the kingdom. And it now appears that the Saudis don't care anymore about the U.S. "security guarantees" and instead are shifting their loyalty to China.
It can be recalled that way back in March 2018, China introduced yuan-priced oil contracts in an effort to make its currency tradable around the world. Credit Suisse strategist Zoltan Pozsar noticed that the use of dollars has become a hazard for China, highlighted by U.S. sanctions on Iran over its nuclear program and on Russia in response to its invasion of Ukraine.
The historic transition is not a surprise since China has been stepping up its courtship of the Saudi kingdom in past years by helping Saudi Arabia create its own ballistic missiles, advising on a nuclear program and contributing in Crown Prince Mohammed bin Salman's favorite projects, such as futuristic new city Neom.
Meanwhile, the Saudi-U.S. relationship has degenerated under Biden, who said in his 2020 campaign that the kingdom should be a "pariah" for the death of Saudi journalist Jamal Khashoggi in 2018.
It also comes as the U.S. economic relationship with the Saudis dwindles. The U.S. is now among the top oil producers in the world, a huge turnaround from the 1980s when it imported two million barrels of Saudi crude a day. That number dropped to less than 500,000 barrels a day in December 2021.
On the other hand, China's oil imports have increased over the last three decades in accordance with its broadening economy. Saudi Arabia was China's top crude supplier in 2021, selling at 1.76 million barrels a day, followed by Russia at 1.6 million barrels a day, based on data from China's General Administration of Customs.
"The dynamics have dramatically changed. The U.S. relationship with the Saudis has changed, China is the world's biggest crude importer and it is offering many lucrative incentives to the kingdom. China has been offering everything you could possibly imagine to the kingdom," said a Saudi official aware with the talks.
The U.S. is not happy with this historic transition, with a senior U.S. official declaring that the idea of the Saudis selling oil to China in yuan was "highly volatile and aggressive" and "not very likely." The official said the Saudis had floated the idea before when there was tension between Washington and Riyadh.
It is still possible that the Saudis could back away. Shifting millions of barrels of oil trades from dollars to yuan each day could shake the Saudi economy, which has a currency – the riyal – fixed to the dollar.
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Watch the video below to know how the Saudi Arabia and China are initiating a plan to create petroyuan.
This video is from the InfoWars channel on Brighteon.com.