MBS faces dilemma over Russia, China after West push for oil

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With the United States and the United Kingdom amping up pressures on Saudi Arabia to up its oil supplies after Washington and London banned imports of Russian oil and other energy resources, Riyadh expressed little readiness to respond to the West's demand, even going as far as threatening to use the Chinese yuan instead of the US dollar while conducting oil trade with Beijing.

British Prime Minister Boris Johnson paid a visit to Saudi Arabia and its neighbor, the UAE, and he said he hoped to succeed in persuading the two gulf states to increase oil production to ease the repercussions of economic sanctions imposed on Moscow, which have been taking a toll on global energy prices.

Saudi Crown Prince Mohammed bin Salman has been subject to criticism from the West over the killing of Saudi journalist Jamal Khashoggi, and he has been ignored by US President Joe Biden, as he refused to talk to the prince, saying his counterpart was the King, which put US-Saudi relations at an all-time low.

A US delegation also visited the two countries, headed by US security advisor Brett McGurk, pressed Riyadh to increase its oil supplies and find a solution to end the war on Yemen, according to sources, where Saudi Arabia has been waging a war on the Yemeni people for the better half of a decade.

According to sources familiar with the situation, Saudi Arabia is in active negotiations with Beijing to price part of its oil supplies to China in Yuan, a move that would undermine the US dollar's domination of the global petroleum market and represent another turn by the world's top crude exporter toward Asia.

Meanwhile, a source with knowledge of the matter told Reuters, "If Saudi Arabia does that, it will change the dynamics of the forex market."

China's oil imports have increased in tandem with the country's growing economy during the previous three decades. According to data from China's General Administration of Customs, Saudi Arabia was China's top crude supplier in 2021, selling 1.76 million barrels per day, followed by Russia at 1.6 million barrels per day.

Despite the fragile Saudi-Western ties, Prime Minister Johnson described Saudi Arabia and the UAE as "key international partners" in the effort to shift the world off of Russian hydrocarbons and pressure Moscow due to Russia's special military operation in Ukraine.

Saudi is yet to show any signs of walking from the OPEC+ table, where it had signed an agreement as per which the group would only pump more oil gradually.

Read: UAE supports US effort to increase OPEC+ oil production: Blinken
 

The organization itself had convened less than a week after Russia's operation in Ukraine kicked off, but, despite the West rushing to impose sanctions on the country, OPEC+ did not discuss the crisis and stressed that they would adhere to its existing policy.