Saudi Arabia exits agreement to trade their oil in Dollars.

[blankslate]

https://www.tbsnews.net/world/globa...lar-exit-global-finance-paradigm-shift-875321

This is a link at the top of the google search paid.
It's odd that I haven't seen a U.S. paper running the story on the first search.

Google search of Saudi Arabia Petrodollar

The crucial decision to not renew the contract enables Saudi Arabia to sell oil and other goods in multiple currencies, including the Chinese RMB, Euros, Yen, and Yuan, instead of exclusively in US dollars. Additionally, the potential use of digital currencies like Bitcoin may also be considered​

Significant financial upheaval is potentially ahead of the financial world as Saudi Arabia has decided not to renew its 80-year petro-dollar deal with the United States. The deal, which expired on Sunday 9 June, was a cornerstone of the United States global economic dominance.

Sorry about the formatting just copied it straight from the link. What are the short term and long term implications of this? or will there be a renewal of the deal soon?

Seems like a pretty big deal though.




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*edited for spelling error correction in title.

 

[EduCat]

This is something all the 'experts' said would never happen. They prob all want to prepare for war.

 

[ivwshane]

This doesn’t sound good but what are some possible consequences to the US? A weaker dollar? What will replace it?

 

[sdifox]

This is something all the 'experts' said would never happen. They prob all want to prepare for war.

Lurker! Mine!

 

[Leeea]

it will be interesting, but not as much as a few years ago:
https://www.eia.gov/tools/faqs/faq.php?id=709&t=6


the question is, will SA really want to use RMB?

https://www.reuters.com/markets/currencies/chinas-cycle-dollar-hoarding-weakening-yuan-gets-vicious-2024-04-16/

SHANGHAI, April 16 (Reuters) - Chinese businesses are hoarding dollars because they expect their own currency to weaken, and that in turn is exacerbating a slide in the yuan that has been driven by wobbly stock markets and feeble growth in the world's second largest economy.

Rubbles? they are doing fantastic, but:

Russian Ruble - Quote - Chart - Historical Data - News

The USDRUB increased 0.5525 or 0.62% to 89.1025 on Tuesday June 11 from 88.5500 in the previous trading session. Russian Ruble - values, historical data, forecasts and news - updated on June of 2024.

tradingeconomics.com

Additionally, the ruble remained supported by a large extent of capital controls by the Kremlin that artificially prevent the currency from being pressured by low foreign exchange inflows after Western markets loosely shunned Russian energy exports.

translation: You can get rubbles, but you cannot get rid of them. So where does a person spend them?

China's AliExpress stops taking Russian rubles and refuses to ship to Russia, causing major stir

China's online marketplace AliExpress, part of China's massive Alibaba group, has stopped taking Russian rubles and refused to deliver to Russia, Russia's Kommersant claimed.

english.nv.ua

awkward.


So, just what currency is Saudi Arabia going to accept? Euros? yen? won?


Ah, still in the sanctions regime.


Lets say they go with WON, they empower South Korea, who have the most negative views of China in the world. In April 2023 flushed 30 years of ties with Russia down the drain with "no regrets". No friend of SA, and happy to enforce the current world order.


Lets say they go with YEN, they empower Japan. The folks China is about to get into a shooting war over the South China sea. In 2021 Russia had about $20 billion in trade with Japan. In 2024 it doesn't, and Japan has started to make military postures toward the Northern Territory Island chain. No friend of SA, and delighted with the current world order.


Lets say they go with the Euro. Less US influenced then the first two. Openly hostile towards Russia, relationship with China going down the drain, and economy on the edge of recession making stockpiling Euro's just asking for pain. They are one of the primary implementers of the current world order.


Bitcoin? please, please make my day.

 

[Leeea]

https://www.tbsnews.net/world/globa...lar-exit-global-finance-paradigm-shift-875321

...
including the Chinese RMB, Euros, Yen, and Yuan, instead of exclusively in US dollars

RMB == Yuan, they are the same thing.

Going for maximum sensationalism there?

If feels like the writer is either preying on ignorant readers, or is ignorant themselves.

 

[fskimospy]

It’s weird how people are so obsessed with this. It will have little to no effect.

The entire idea is that this increases demand for the US dollar and gives the US leverage over world trade. This is true, but oil trade represents well under 5% of the global economy so the effect of some fraction of that being done in other currencies will likely go entirely unnoticed.

 

[Indus]

It’s weird how people are so obsessed with this. It will have little to no effect.

The entire idea is that this increases demand for the US dollar and gives the US leverage over world trade. This is true, but oil trade represents well under 5% of the global economy so the effect of some fraction of that being done in other currencies will likely go entirely unnoticed.

I think it's a good way for Biden to state.. we cannot be slaves to Foreign Oil.

Get behind the EV market!

 

[fskimospy]

I think it's a good way for Biden to state.. we cannot be slaves to Foreign Oil.

Get behind the EV market!

I mean we already aren’t slaves to foreign oil - the US is a net exporter.

 

[brycejones]

I mean we already aren’t slaves to foreign oil - the US is a net exporter.

This can’t be repeated enough. To listen to the GOP you would think we import every drop of oil we use.

 

[Indus]

I mean we already aren’t slaves to foreign oil - the US is a net exporter.

Not by choice.. we don't have refineries to refine our own oil. Instead we have refineries to refine foreign oil.. which places us in a position where we have to export and import to satisfy our own needs.

There's 2 ways to fix this.. make our own refinery for shale or just go in on EV.

But Americans aren't good at fixing their own shit.. they love to get the new shiny toys!

 

[K1052]

Not by choice.. we don't have refineries to refine our own oil. Instead we have refineries to refine foreign oil.. which places us in a position where we have to export and import to satisfy our own needs.

There's 2 ways to fix this.. make our own refinery for shale or just go in on EV.

But Americans aren't good at fixing their own shit.. they love to get the new shiny toys!

US capacity to refine light crude has some limitations but refiners have largely adapted by mixing in heavier grades before refining.

Oil and distillate markets are always going to have trade. We'll take oil from some places and ship distillate out to others depending on the circumstances.

 

[kage69]

Not that surprising. Mohammad bin Bonesaw has a fantasy city project to fund, while the US produces more energy than it needs and the West pushes renewables. SA sees declining revenues in the future and wants to capitalize on demand as much as possible in the mean time, which means broadening what they accept in payment.

I too don't think this will amount to much financial risk. The ruble and RMB still look like toilet paper compared to the strongest currency there is, the US dollar. The real risk is that the net effect will be increased consumption. Probably more of a threat to our targeted Co2 emission goals than the American dollar I think.

 

[fskimospy]

An easier way to phrase this is 'what effect will it have when some small fraction of 3% of the global economy is not denominated in dollars?'

Probably not a lot.

 

[K1052]

Not that surprising. Mohammad bin Bonesaw has a fantasy city project to fund, while the US produces more energy than it needs and the West pushes renewables. SA sees declining revenues in the future and wants to capitalize on demand as much as possible in the mean time, which means broadening what they accept in payment.

I too don't think this will amount to much. The ruble and RMB still look like toilet paper compared to the strongest currency there is, the US dollar. The net effect will be increased consumption, so this is more of a threat to our targetted Co2 emission goals than the American dollar I think. We have to stop burnings things.

Biggest long term threat to the Saudis is Chinese electrification and EV exports to the developing world.