Exclusive | Saudi Arabia ‘open’ to petroyuan, closer China ties, minister says

Saudi Arabia’s minister of industry says country willing to ‘try new things’ in relationship with China, Chinese companies ‘welcome’

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Saudi Arabia and China have grown closer as the Middle Eastern country looks to diversify its economy beyond the oil trade. Photo: AFP

Published: 6:00pm, 9 Sep 2024Updated: 1:54pm, 11 Sep 2024

A top official from Saudi Arabia said the country is “open to new ideas” – including use of the yuan in crude settlements – as the oil-rich Middle Eastern nation looks to incorporate Chinese products like electric vehicles (EVs), the C919 passenger jet and renewable energy infrastructure while it attempts to diversify its economy.

Bandar Al-khorayef, Saudi minister of industry and mineral resources, made the comments as the two countries have moved closer despite an escalating rivalry between China and the US, Saudi Arabia’s traditional ally.

“The petroyuan is not substantial to [the ministry], we believe Saudi Arabia will do what’s in its best interest … but I think Saudi Arabia will always try new things, and is open to new ideas, and we try not to mix politics with commerce,” Khorayef said in an interview on Saturday in Hong Kong.

Broader adoption of the petroyuan – shorthand for the use of China’s currency in cross-border crude oil settlements – is widely viewed as the next step for the yuan’s internationalisation, and a challenge to the omnipresent US dollar in global commodity markets.

The currency’s use has grown – alongside trade with Russia, China’s largest source of crude imports – after Moscow was locked out of the US dollar system following its invasion of Ukraine in February 2022.

Beijing is also advancing the yuan’s reach in international trade more generally – it signed a three-year currency swap deal with Saudi Arabia worth 50 billion yuan (US$7.1 billion) in November 2023 and has shown a preference for settling in local currency with trading partners.