{"id":71583,"date":"2023-03-27T06:00:00","date_gmt":"2023-03-27T04:00:00","guid":{"rendered":"https:\/\/www.futuribles.com\/des-petrodollars-aux-petroyuans\/"},"modified":"2023-09-19T09:24:47","modified_gmt":"2023-09-19T07:24:47","slug":"des-petrodollars-aux-petroyuans","status":"publish","type":"post","link":"https:\/\/www.futuribles.com\/en\/des-petrodollars-aux-petroyuans\/","title":{"rendered":"From Petrodollars to Petroyuans"},"content":{"rendered":"
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At the Davos forum in January 2023, Mohammed Al-Jadaan, Saudi Arabia\u2019s finance minister, made a high-profile statement<\/a> about opening up the sale of Saudi oil in currencies other than the US dollar. This announcement breaks a pact with the country\u2019s historic ally, the US: since 1974, in exchange for US military and political protection, the Saudis have linked their currency, the riyal, to the US dollar, accepting the latter as the sole currency for selling their oil. The other oil countries followed suit, similarly adopting the use of the US dollar for their transactions.<\/h6>\n\n\n\n

In 2000, only two countries were trying to escape the petrodollar:[1]<\/a><\/sup> Venezuela and Iraq. Hugo Chavez\u2019s Venezuela had set up a system for exchanging oil for goods and services with other Central American countries. Saddam Hussein\u2019s Iraq, then under trade regulation imposed by the United Nations Security Council Sanctions Committee, had asked the Committee for permission (which was granted) to receive payment for its oil exports in euros. This was the case until the US intervention<\/a> in Iraq in March 2003, which immediately put an end to the \u201ceuroisation\u201d of Iraq\u2019s oil. As for Venezuela<\/a>, in response to the US sanctions against it, it even opted in 2017 for a complete rejection of the US dollar, instead accepting yuans and euros for the sale of its oil. In 2003<\/a>, Iran started to invoice its oil exports to Asia and Europe in euros.<\/p>\n\n\n<\/div>\n

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Russia was the next to start to diversify the currency of payment for its exports of crude oil. In 2019<\/a>, it was paid in euros for its long-term oil sales to the China National Petroleum Corporation (CNPC). Then in 2022, while subject to Western sanctions over the war in Ukraine, it was paid in yuan. But these symbolic decisions should not obscure the fact that, by 2021<\/a>, of all Russian exports \u2014 oil as well as many other commodities that are usually traded in US dollars around the world \u2014 55% were paid for in US dollars and 29% in euros. The US dollar and, to a much lesser extent, the euro therefore still dominate Russian exports, including to China. Nevertheless, both Moscow and Beijing want to promote trade in their own currency and to reduce dependence on the US dollar. While the yuan did not appear in Russian foreign exchange reserves in 2013, it represented 13% of those reserves in 2021. Over the same period, the share of the ruble and the yuan in Russia\u2019s exports to China rose from 3% to 15%; and in Russian imports from China, it rose from 6% to 31%.<\/p>\n\n <\/div>\n

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7 September 2021<\/div>\n FUTURIBLES<\/a>\n
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The recent Saudi statement is so surprising, not only because Saudi Arabia is the largest holder of conventional crude oil reserves, but also because the country was supposed to be an American ally \u2014 despite disagreements between Joe Biden and Mohammed bin Salman (MBS) \u2014 unlike other producers who have turned away from the US dollar. Moreover, this change might come to be emulated by the other Member States of the Organization of the Petroleum Exporting Countries (OPEC).<\/p>\n\n\n\n

Although 80% of oil is still traded in US dollars, China\u2019s position as the world\u2019s largest importer of oil and gas is becoming increasingly important. The US is importing much less since the boom in shale oil and gas, while European countries are trying to reduce their use of fossil fuels for both electricity production and transport in favour of renewable energy.<\/p>\n\n\n\n

During his visit to Riyadh in December 2022<\/a>, During his visit to Riyadh in December 2022<\/a>, Xi Jinping signed a strategic partnership agreement with Saudi Arabia in which China promises to continue to import large quantities of oil from Gulf countries, including Saudi Arabia, and stipulates that these transactions will be paid for, at least in part, in yuan.<\/p>\n\n\n\n

Russia and India are also aiming to move away from the US dollar and the euro in their trade, in favour of the ruble and the rupee.<\/p>\n\n\n\n

Beyond oil, the US dollar\u2019s share of global foreign exchange reserves has fallen by twelve percentage points in 22 years, from 71% to 59%, reaching its lowest level in twenty-five years in 2021<\/a>. The euro\u2019s share fluctuates around 20%, while other currencies (including the Canadian dollar, the Australian dollar, and the yuan, but excluding the Japanese yen and the British pound) are seeing their use increase, reaching a combined share of 10% by the end of 2021.<\/p>\n\n\n

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\n Currency Composition of Global Foreign Exchange Reserves (%)\n <\/p>\n <\/div>\n

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Note:<\/em> China only responded to the survey between 2015 and 2018. The yuan is included in the \u201cOther\u201d category.<\/p>\n

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Source: <\/em>IMF (International Monetary Fund) COFER (Currency Composition of Official Foreign Exchange Reserves) Survey, in IFM Blog<\/em><\/a>, <\/em>1 June 2022.<\/p>\n

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However, other currencies or baskets of currencies do not represent the only alternative to the US dollar: for the past decade, and after two decades of net sales, central banks have been buying gold. Demand increased<\/a> by 18% in 2022 compared to 2021. This trend also appears to be a way of \u201cde-dollarising\u201d foreign exchange reserves, via an asset that has no counterparty risk and which has a secure long-term value. Although the details of the countries buying gold are not fully known \u2014 with the exception of Turkey \u2014 experts believe that China, Russia, and the Gulf States are the main buyers of gold.<\/p>\n\n\n\n

Of course, the US dollar is not going to lose its status as the main reserve currency any time soon, as both the Saudis and the Chinese would lose money if it devalued too quickly: China holds<\/a> US$1 trillion in US Treasury bonds, while Saudi Arabia holds US$121 billion in US Treasury bonds and US$608 billion in US equities.<\/p>\n\n\n\n

Yet the privilege enjoyed by the the US dollar as a result of its position as the main reserve currency is enormous: as each country needs it to buy its raw materials, any change in the US Federal Reserve\u2019s monetary policy has an impact on both the value of raw materials in other countries and on their currencies. It is therefore likely that all states will seek to diversify their foreign exchange reserves to become less dependent on the US dollar\u2019s ups and downs driven by US domestic political needs.<\/p>\n\n\n\n

The power of the US over the world\u2019s reserve currency rests on the fact that these US dollars are reinvested in the US debt \u2014 which is colossal compared to other countries \u2014 thus preventing the currency from collapsing. The first consequence of currency diversification for the US would therefore be an increase in the difficulty of borrowing. Washington\u2019s ability to impose unilateral economic sanctions on other countries could also disappear if the US ceases to be the master of the financial game.<\/p>\n\n\n\n

\u00a0This translation from French has been revised by Sam Ferguson.<\/em><\/p>\n\n\n

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  1. \n

    Lamblin<\/span> V\u00e9ronique, \u201cL\u2019euro, une arme de destruction massive?\u201d, Futuribles, <\/em>no.287<\/a>, June 2003, pp. 72-75. \u2191<\/a><\/p>\n<\/li>\n<\/ol><\/div>","protected":false},"excerpt":{"rendered":"

    At the Davos forum in January 2023, Mohammed Al-Jadaan, Saudi Arabia\u2019s finance minister, made a high-profile statement about opening up the sale of Saudi oil in currencies other than the US dollar. This announcement breaks a pact with the country\u2019s historic ally, the US: since 1974, in exchange for US military and political protection, the … Continued<\/a><\/p>\n","protected":false},"author":25,"featured_media":68724,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","_seopress_robots_follow":"","_seopress_robots_imageindex":"","_seopress_robots_snippet":"","_seopress_robots_primary_cat":"none","_seopress_robots_breadcrumbs":"","_seopress_robots_freeze_modified_date":"","_seopress_robots_custom_modified_date":"","_seopress_robots_canonical":"","_seopress_social_fb_title":"","_seopress_social_fb_desc":"","_seopress_social_fb_img":"","_seopress_social_fb_img_attachment_id":0,"_seopress_social_fb_img_width":0,"_seopress_social_fb_img_height":0,"_seopress_social_twitter_title":"","_seopress_social_twitter_desc":"","_seopress_social_twitter_img":"","_seopress_social_twitter_img_attachment_id":0,"_seopress_social_twitter_img_width":0,"_seopress_social_twitter_img_height":0,"_seopress_redirections_value":"","_seopress_redirections_enabled":"","_seopress_redirections_enabled_regex":"","_seopress_redirections_logged_status":"both","_seopress_redirections_param":"","_seopress_redirections_type":301,"_seopress_analysis_target_kw":"","footnotes":""},"categories":[140],"tags":[133,203],"keyword":[953,1291,1256,1129,1052,1429,909],"class_list":["post-71583","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-newswatch","tag-economie-et-emploi-en","tag-geopolitique-en","keyword-chine-en","keyword-systeme-monetaire-international-en","keyword-monnaie-en","keyword-petrole-en","keyword-russie-en","keyword-arabie-saoudite-en","keyword-etats-unis-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/posts\/71583","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/comments?post=71583"}],"version-history":[{"count":5,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/posts\/71583\/revisions"}],"predecessor-version":[{"id":79959,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/posts\/71583\/revisions\/79959"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/media\/68724"}],"wp:attachment":[{"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/media?parent=71583"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/categories?post=71583"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/tags?post=71583"},{"taxonomy":"keyword","embeddable":true,"href":"https:\/\/www.futuribles.com\/en\/wp-json\/wp\/v2\/keyword?post=71583"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}