Saudi Arabia moves further away from the USA

10 mins

Yuan VS Dollar Saudi Arabia is in talks with China about changing the price of its oil sale...

Mane Energy Team

By Mane Energy Team

Yuan VS Dollar

Saudi Arabia is in talks with China about changing the price of its oil sales to yuan currency, putting a risk that the USA’s dollar dominance is under threat, as this change would move the world’s top exporter towards Asia.

With China buying over 25% of the oil which Saudi Arabia exports, changing the pricing to yuan currency would boost China’s currency significantly. An estimated 80% of global oil sales are done in the dollar currency. Since 1974, Saudi Arabia has traded oil exclusively using the dollar.

Now, China believes that using the dollar is becoming a hazard which has been highlighted by the USA’s sanctions against Iran and their nuclear program, as well as on Russia as a response to the war with Ukraine.

BRICS group of nations

Saudi Arabia and Iran wish to join the BRICS group of nations. However, BRICS are still considering whether to allow new members in. Three meetings will take place over the next few months to help the group to decide whether they should allow Iran and Saudi Arabia to join.

Current members include Brazil, Russia, India, China and South Africa. These countries together are potentially a political force which may serve as an alternative to the USA’s global leading economic system. Currently, Washington’s influence is on a decline across the world.

Without a doubt, China is the most significant member of BRICS and is thought to have been the country which initiated the discussion of expansion, suggesting they wish to let Saudi Arabia and Iran join.

Other members of BRICS are reporting to be uncomfortable with China’s influence over the board, and fear that their own influence could be diluted if these new members join.

The USA finds itself on the sidelines

With the help of China, a peace deal has been made in the middle east between Saudi Arabia and Iran. This led to the USA finding itself at the sidelines of alliances, for the first time in nearly three-quarters of a century. China is sneaking their way into a powerful position across the globe.

The key factor to the alliance between Saudi Arabia and Iran was the commitment Iran made to stop future attacks on Saudi Arabia.

With President Biden having attempted to ease relations with Saudi Arabia over recent years, and having sadly failed, the Saudis are now turning to the Chinese for a stronger alliance. Saudi Arabia is now showing an interest in joining SCO (Shanghai Cooperation Organization) where a great deal of its oil already goes to the Chinese.

This shift in dynamics poses a threat to the Biden administration because it would prefer to focus elsewhere. There has been a suggestion that China is taking advantage of Saudi Arabia’s anger which is directed towards the USA.

China created an alliance between Saudi Arabia and Iran at a time when Israel hoped for the USA and Saudi Arabia to come together. Israel wishes to make peace with Saudi Arabia, creating a significant change in Israel’s status and ending many years of isolation by the Arab world.

Unfortunately, in exchange for opening ties with Israel, Saudi Arabia has asked for the USA to give security guarantees, which Washington is not willing to give. These security guarantees would help develop a nuclear program.

These requests have been thought to be extremely excessive by administration officials, seeing them as an opening bid which might lead to normalization. Regardless, President Biden has attempted to make progress between Saudi Arabia and Israel by opening up Saudi airspace to all Israeli civilian aeroplanes.

A nuclear agreement was made with Iran in 2015, by President Barack Obama, and then abandoned by President Trump. Unfortunately, Biden has failed to revive the agreement, in an attempt to help calm hostilities in Yemen.

It appears that Iran currently has enough enriched uranium to build nuclear weapons if they choose to. On top of this, Iran is moving towards deepening its relationship with Russia as well as China. Tehran, Iran’s primate city,  even provided essential drones for Russia to use in its war with Ukraine.

Iran has turned to China to mediate with Saudi Arabia, seeking to end any isolation which was created by the USA. Whilst Israel finds any hope for an anti-Iranian coalition with the Saudis to be lost.

American sanctions have caused economic distress in Iran. It should be mentioned that China does not necessarily want Iran to have nuclear weapons either. If China can have a new sway in Tehran, then USA officials have hope that it could maybe use this to swerve away from Iran’s nuclear ambitions.

Despite this, it is concerning for many Americans to see China have such a significant role in these movements across the region after many years of making inroads. This is a reminder that competition between countries remains on a global stage.

The USA remains hold of key playing cards in the Middle East on extensive trade and military, tieing together some of the most vital players in the Middle East region.

After the collapse of the Soviet Union at the end of the Cold War, the USA was the only outside player which remained important in the Middle East. However,  Russia returned to force back in 2015.

With the decision by China to get back involved in the Saudi-Iranian rift, it has become clear that China is the new power player to watch across the globe. China seeks military bases of their own across the world, and they pursue energy resources beyond Asia, as well as influence on other countries.

Arguably, these moves by China may not be as big a threat as Americans currently worry, but it most certainly reflects that regional order is changing.

The future of the USA’s global power remains a question as new alliances continue to be made in the Middle East.

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