All right, so the country that matters here, the only country that in my opinion is doing anything meaningful when it comes to moving from the dollar to something else is Saudi Arabia. Saudi is the world’s largest oil exporter. And they have started to accept payment from a number of Chinese government entities in you won. And we’re talking here about, you know, a few 100 million dollars a cargo so it’s hardly an insignificant issue. There’s no sign that they’re changing the reserves. And I wouldn’t expect that to happen, because there’s a specific rationale here. Now, the Saudis military on paper is great, they’ve got a lot of top notch equipment. But they have demonstrated over and over and over in recent decades that the Saudi military is incapable of operating its own equipment at scale, much less than any sort of coordinated manner. I mean, they can fly their planes and bomb things. And that’s about it. They have always, since their independence relied on an external security guarantor in order to keep them alive. At first, that was the Brits, and for the last several decades, especially under globalization, it has been the Americans. Now the Saudis think a little bit differently. They basically have modeled themselves off of medieval fiefdom. And so they think that bribes work really well, in order to get what you want. This is one of the reasons why they got along so well, with former American President Donald Trump, they saw the world through basically the same lens when it came to operating procedures. So what they’ve done with the United States is, they’ve bought a number of refineries on the US Gulf Coast, and shipped crude from Saudi Arabia to the US Gulf Coast. And if there’s a time when the Americans look like they might be facing high energy prices, or some pressure in the market, they sail additional cargoes and just let them Park off coast until they’re called for. Now, it’s not like the United States, you know, thinks this is bad thing. But the United States gets the vast, vast, vast majority of its oil always has from the Western Hemisphere, with traditionally, Canada and Mexico being our largest suppliers. Now, of course, with the shale revolution in the last 15 years, the United States is a net exporter. So the Saudi angle here is very, very small from an American point of view. But for the Saudis, this was never about the economics. It was about currying favor with the guy who’s supposed to defend you. Well, in the last few years, the United States has moved more and more of its forces out of the Persian Gulf, and we no longer even have a carrier group that’s there on a regular basis. So the Saudis are a little scared. They are concerned that without the Americans guaranteeing their security that they’re screwed, and you know, that’s a reasonable position. So they’ve been looking about for a replacement, and they’re discovering that there isn’t a really good clean one, the French and the Brits could theoretically project power into the Persian Gulf, but definitely not as reliable as the United States. Turkey certainly could. But they would have to conquer Iraq first. And you know, the Saudis have a lot of opinions on a lot of things going on in Iraq, but they’d really rather not have a regional superpower right on their border. India is probably in the long run the most likely outcome, but they’re not Muslim. So the Indians tendency to meddle in political events in places where they have military forces, especially in like Afghanistan has really soured the Saudis. Japan’s a possibility, but Tran has other options as well, most notably, it has gotten in bed with the United States and can access the energy of the Western Hemisphere. That just leaves China. Now, the Saudis aren’t all that hot on China, the Chinese navy really can’t project power. And the Chinese have no experience projecting power in military terms, beyond their own neighborhood, much less going the 5000 miles that would take to get to the Persian Gulf. There’s also low confidence in Saudi Arabia that if a fight broke out, that the Chinese would side with the Saudis against their primary regional rival Iran. But if there’s one thing the Saudis have its money to spare. So they have gone into China and bought up a few refineries entered a joint ventures with Chinese state energy firms, and are shipping crude to China like they used to ship it to the United States. Now, from the Saudi point of view, this might actually work better in terms of currying favor than it ever did with the Americans, because the Chinese actually need the crude. They import three quarters of their total, of which roughly three quarters comes from Africa and the Persian Gulf. And so they’re paying for that and you won, in order specifically in their mindset to bribe the Chinese to come to their aid when the rubber hits the road. This is not an economic decision. This is a political decision being made not because they don’t like the dollar, but because they think the dollar doesn’t give them the military guarantees that they thought it once did. So this is Saudi making a decision because of military strategy as shaped by their own culture, not because they think the US dollar is going anywhere. But still, this is the only example I’m seeing out there of a meaningful shift away from the dollar and it’s only for trade with one country for one commodity. Alright that’s it for me I’m gonna take a shower and like dripping sweat you guys take care
Related
Peter Zeihan
Geopolitical Strategist
View Video LibraryCommentary
Our commentary partners will help you reach your own conclusions on complex topics.
Japan’s navy gets an upgrade
3 hrs ago
Peter Zeihan
How could RFK Jr. impact 2024 election?
Friday
Peter Zeihan
Global warming won’t impact Russian-Chinese shipping
Thursday
Peter Zeihan
Can other nations replicate success of US shale revolution?
Wednesday
Peter Zeihan
Is Saudi Arabia ditching the US dollar for the Chinese yuan?
May 26, 2023
By Straight Arrow News
For decades, the U.S. dollar has been the primary medium of exchange for international trade, but recent developments are impacting the dollar’s global dominance. China has been making efforts to replace the U.S. currency with its own, the yuan. Now Saudi Arabia is helping accelerate those efforts by agreeing to sell its oil to China — in yuan. Straight Arrow News contributor Peter Zeihan isn’t as worried about de-dollarization as some, because he says no other country has the liquidity needed to establish a credible alternative.
Excerpted from Peter’s May 25 “Zeihan on Geopolitics” newsletter:
The Saudis have relied upon the U.S. for military protections for years, but as the U.S. reduces its naval presence in the Persian Gulf, Saudi Arabia will have to find those protections elsewhere.
As the world’s largest oil exporter, Saudi Arabia has learned a few tricks to curry favor from different countries. Their most recent endeavor is accepting the Chinese yuan as payment for a few hundred million barrels of oil… and that’s not an insignificant amount.
This move isn’t happening because the Saudis are worried about de-dollarization; it’s solely a move to win the Chinese over and establish a new external military guarantee. Still, this remains the only meaningful shift away from the USD, even though it’s from one country, for one commodity, and for one reason.
I’ve said it before, and I’ll say it again… the US Dollar ain’t going nowhere.
All right, so the country that matters here, the only country that in my opinion is doing anything meaningful when it comes to moving from the dollar to something else is Saudi Arabia. Saudi is the world’s largest oil exporter. And they have started to accept payment from a number of Chinese government entities in you won. And we’re talking here about, you know, a few 100 million dollars a cargo so it’s hardly an insignificant issue. There’s no sign that they’re changing the reserves. And I wouldn’t expect that to happen, because there’s a specific rationale here. Now, the Saudis military on paper is great, they’ve got a lot of top notch equipment. But they have demonstrated over and over and over in recent decades that the Saudi military is incapable of operating its own equipment at scale, much less than any sort of coordinated manner. I mean, they can fly their planes and bomb things. And that’s about it. They have always, since their independence relied on an external security guarantor in order to keep them alive. At first, that was the Brits, and for the last several decades, especially under globalization, it has been the Americans. Now the Saudis think a little bit differently. They basically have modeled themselves off of medieval fiefdom. And so they think that bribes work really well, in order to get what you want. This is one of the reasons why they got along so well, with former American President Donald Trump, they saw the world through basically the same lens when it came to operating procedures. So what they’ve done with the United States is, they’ve bought a number of refineries on the US Gulf Coast, and shipped crude from Saudi Arabia to the US Gulf Coast. And if there’s a time when the Americans look like they might be facing high energy prices, or some pressure in the market, they sail additional cargoes and just let them Park off coast until they’re called for. Now, it’s not like the United States, you know, thinks this is bad thing. But the United States gets the vast, vast, vast majority of its oil always has from the Western Hemisphere, with traditionally, Canada and Mexico being our largest suppliers. Now, of course, with the shale revolution in the last 15 years, the United States is a net exporter. So the Saudi angle here is very, very small from an American point of view. But for the Saudis, this was never about the economics. It was about currying favor with the guy who’s supposed to defend you. Well, in the last few years, the United States has moved more and more of its forces out of the Persian Gulf, and we no longer even have a carrier group that’s there on a regular basis. So the Saudis are a little scared. They are concerned that without the Americans guaranteeing their security that they’re screwed, and you know, that’s a reasonable position. So they’ve been looking about for a replacement, and they’re discovering that there isn’t a really good clean one, the French and the Brits could theoretically project power into the Persian Gulf, but definitely not as reliable as the United States. Turkey certainly could. But they would have to conquer Iraq first. And you know, the Saudis have a lot of opinions on a lot of things going on in Iraq, but they’d really rather not have a regional superpower right on their border. India is probably in the long run the most likely outcome, but they’re not Muslim. So the Indians tendency to meddle in political events in places where they have military forces, especially in like Afghanistan has really soured the Saudis. Japan’s a possibility, but Tran has other options as well, most notably, it has gotten in bed with the United States and can access the energy of the Western Hemisphere. That just leaves China. Now, the Saudis aren’t all that hot on China, the Chinese navy really can’t project power. And the Chinese have no experience projecting power in military terms, beyond their own neighborhood, much less going the 5000 miles that would take to get to the Persian Gulf. There’s also low confidence in Saudi Arabia that if a fight broke out, that the Chinese would side with the Saudis against their primary regional rival Iran. But if there’s one thing the Saudis have its money to spare. So they have gone into China and bought up a few refineries entered a joint ventures with Chinese state energy firms, and are shipping crude to China like they used to ship it to the United States. Now, from the Saudi point of view, this might actually work better in terms of currying favor than it ever did with the Americans, because the Chinese actually need the crude. They import three quarters of their total, of which roughly three quarters comes from Africa and the Persian Gulf. And so they’re paying for that and you won, in order specifically in their mindset to bribe the Chinese to come to their aid when the rubber hits the road. This is not an economic decision. This is a political decision being made not because they don’t like the dollar, but because they think the dollar doesn’t give them the military guarantees that they thought it once did. So this is Saudi making a decision because of military strategy as shaped by their own culture, not because they think the US dollar is going anywhere. But still, this is the only example I’m seeing out there of a meaningful shift away from the dollar and it’s only for trade with one country for one commodity. Alright that’s it for me I’m gonna take a shower and like dripping sweat you guys take care
Related
Japan’s navy gets an upgrade
Following their defeat in World War II, the people of Japan pursued a largely pacifist foreign policy. Today, following Russia’s invasion of Ukraine and with near-daily news regarding China’s threatening activities throughout the greater Pacific, the Japanese are reinvesting in military defense and reaffirming their alliances with Pacific partners like Australia and the United States.…
3 hrs ago
How could RFK Jr. impact 2024 election?
Many Americans speculated about how a potential RFK, Jr. campaign might impact the 2024 elections. While RFK is neither a Democrat nor a Republican, many of his positions favor Donald Trump’s base over Joe Biden’s, particularly his various conspiracy theories on a wide range of subjects. Straight Arrow News contributor Peter Zeihan says that GOP…
Friday
Global warming won’t impact Russian-Chinese shipping
The seas above Russia’s northern coastline are too frozen for shipping, but some have wondered whether global warming might change that in the decades to come. If those seas were to become navigable for commercial shipping, new direct routes between Russia and China could theoretically open up. Straight Arrow News contributor Peter Zeihan throws more…
Thursday
Can other nations replicate success of US shale revolution?
The “shale revolution” has provided the United States with a bountiful domestic supply of oil. But extracting oil from shale is a highly technical process, and it is also dependent on specific geological formations. Straight Arrow News contributor Peter Zeihan tackles the question of whether or not other nations might be able to replicate the…
Wednesday
Peace between Israel and Iran, at least for now
A series of recent airstrikes between Israel and Iran inflamed fears of a wider regional war erupting in the Middle East. That concern now seems to have paid off, after third-party countries around the world successfully intervened and talked down military hardliners in both Israel and Iran in order to avoid such an outcome. Israel’s…
Tuesday
Underreported stories from each side
Fetterman decries college campus ‘pup tents for Hamas’
6 sources | 0% from the left
Reuters
Trans Mountain pipeline project ushers in new era for oilsands hub Fort McMurray
19 sources | 17% from the right
Getty Images
Latest Stories
USC commencement speakers pull out after valedictorian speech canceled
Watch 2:17
6 mins ago
Ukraine retreats from villages as it waits for US aid to arrive
Watch 2:42
48 mins ago
Texas Gov. Abbott warns migrants of alligators in Rio Grande
Watch 3:07
59 mins ago
Study: 56 of leading brands responsible for more than 50% of plastic pollution
Watch 1:54
2 hrs ago
Musk visits Beijing as Tesla’s China-made cars clear data security hurdles
Watch 0:45
6 hrs ago
Popular Opinions
In addition to the facts, we believe it’s vital to hear perspectives from all sides of the political spectrum.
College sports is big money but not everyone benefits
2 hrs ago
Larry Lindsey
Will MAGA GOP remove Speaker Johnson?
4 hrs ago
David Pakman
House Speaker Johnson’s foreign aid bill shows a focused GOP
Friday
Star Parker
Trump’s own behavior betrays his guilt
Friday
Dr. Rashad Richey