Ashok Swain, a professor of peace and conflict research in Sweden, said last week that Saudi Arabia joining the BRICS economic bloc would accelerate the use of the Chinese yuan as a trading currency.
In March, Saudi Arabia became a dialogue partner of the SCO. The Shanghai Cooperation Organization was established in 2001 as a political, economic, and defence alliance; it is the world’s largest regional organization. Saudi Arabia is not yet a member of the BRICS group but the country has expressed interest in joining. Last month, Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman Al Saud discussed potential collaboration between Saudi Arabia and the BRICS.
Meanwhile, Saudi Arabia is actively negotiating with Beijing to price some of its oil sales to China in yuan, according to reports. While the discussions regarding yuan-priced oil contracts have been taking place on and off for six years between the two nations, they have intensified this year. The professor noted that oil trade in yuan will be a “huge step” for China and “a significant setback to the dollar’s standing.”
A growing number of countries are shifting away from using U.S. dollars to settle trades. China’s yuan recently replaced the USD as the most traded currency in Russia as well as the most used currency to settle cross-border payments in China.
The BRICS group is also working to create a new currency to reduce its member countries’ reliance on the U.S. dollar. A former White House economist believes that a BRICS currency will erode the U.S. dollar’s dominance. Another economist predicted that the yuan and euro would disrupt the U.S. dollar’s dominance and that the three will form a tripolar reserve currency world.