At the Davos forum in January 2023, Mohammed Al-Jadaan, Saudi Arabia’s 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’s 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.
In 2000, only two countries were trying to escape the petrodollar:[1] Venezuela and Iraq. Hugo Chavez’s Venezuela had set up a system for exchanging oil for goods and services with other Central American countries. Saddam Hussein’s 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 in Iraq in March 2003, which immediately put an end to the “euroisation” of Iraq’s oil. As for Venezuela, 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, Iran started to invoice its oil exports to Asia and Europe in euros.
Russia was the next to start to diversify the currency of payment for its exports of crude oil. In 2019, 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, of all Russian exports — oil as well as many other commodities that are usually traded in US dollars around the world — 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 201...
