During Tuesday's afternoon White House press conference, Biden press secretary Jen Psaki was questioned on reports that Saudi Arabia is preparing to price its oil sales to China in yuan instead of US dollars.
"There's reporting that Saudi Arabia is considering accepting the [yuan] instead of the dollar for Chinese oil. Is the White House monitoring that possibility? And has the administration communicated that there would be any types of consequences if that happened?" one reporter asked at the White House press briefing.
"Let me check with the Treasury Department on it. Good question. I hadn't seen the report. I'll check with them," Psaki responded.
According to The Wall Street Journal, the move to change the currency would "dent the U.S. dollar's dominance of the global petroleum market and mark another shift by the world's top crude exporter toward Asia."
China currently buys more than 25 percent of oil that is exported by Saudi Arabia. If these exports are priced in yuan instead of the US dollar, that would boost China’s currency, according to the news outlet.
"The Saudis are also considering including yuan-denominated futures contracts, known as the petroyuan, in the pricing model of Saudi Arabian Oil Co., known as Aramco," The Wall Street Journal reported.
A majority of Saudi Arabia's oil sales around the globe are done in US dollars, around 80 percent. The Saudis have reportedly traded oil exclusively in the US currency since a 1974 deal made with the Nixon administration.
The reports of the potential change comes as the kingdom moves closer to China, and further from the US. China reportedly helped the country build its own ballistic missiles, consulted on a nuclear program, and invested in projects headed by Crown Prince Mohammed bin Salman.
In contrast, the US-Saudi Arabia relationship has reportedly deteriorated under the Biden administration. Biden reportedly said in his 2020 campaign that the kingdom should be a "pariah" for the killing of Saudi journalist Jamal Khashoggi in 2018.
The US has also sharply decreased its imports from the country as it increases its own oil production. In the 1990s, the US once imported around 2 million barrels of Saudi crude oil per day, but this number has fallen below 500,000.
China on the other hand has sharply increased its exports, with Saudi Arabia becoming the country's top crude oil supplier in 2021 at 1.76 million barrels per day.
"The dynamics have dramatically changed. The U.S. relationship with the Saudis has changed, China is the world’s biggest crude importer and they are offering many lucrative incentives to the kingdom," said a Saudi official familiar with the talks.
"China has been offering everything you could possibly imagine to the kingdom," the official said.
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