Will Anything Be Left of the U.S. After Biden Is Done With It? By Victoria Taft
Joe Biden’s recent dumping of Afghanistan is just one of the reasons behind the Kingdom’s stepped-up talks with the communist regime.
The overwhelming number of oil deals in the world are done using the U.S. petrodollar. Moving to the yuan, at least in deals with China, which buys 25% of all Saudi oil, will have a huge impact on world markets. It also calls into question the U.S. dollar’s prominence as the world’s reserve currency.
It is hard to underestimate the fiscal calamity that such a possible move could have on the strength of the U.S. dollar and prestige in world markets. Conversely, the potential move to the yuan could elevate China’s currency to new prestige.
The Journal spoke to Gal Luft, a national security expert who’s written about possible “de-dollarization.” Luft said oil markets are the “insurance policy of the status of the dollar as reserve currency. […] If that block is taken out of the wall, the wall will begin to collapse.”
The Journal reported in Tuesday’s edition that “the talks with China over yuan-priced oil contracts have been off and on for six years but have accelerated this year as the Saudis have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom.”
The Journal also reported that “the Saudis are angry over the U.S.’s lack of support for their intervention in the Yemen civil war and over the Biden administration’s attempt to strike a deal with Iran over its nuclear program. Saudi officials have said they were shocked by the precipitous U.S. withdrawal from Afghanistan last year.”
Bloomberg reported that news of the potential shift caused a price increase in the communist China currency after the news broke on Tuesday.
The rift between Biden and Prince Mohammed has gotten worse. The prince and key emirs refused to take the U.S. president’s calls after Biden’s spike in gas prices became a domestic political liability for him. Though higher prices were always part of Biden’s plan, the president called the Saudis as a hail-Mohammed move to calm angry Americans.
In addition to the other factors that combined to make Joe Biden the Saudi bête noire and gave the Saudis pause about the security commitment to the Kingdom, the business newspaper reported that Biden calling the Kingdom a “pariah” for the murder of Jamal Khashoggi played a role.
Recommended: Well, Well, Well … Russia Hoax Special Counsel Is Investigating the 2016 DNC Server ‘Hack’ and That’s Not All
The U.S. under President Trump also stepped up oil and gas production to become one of the world’s top oil producers. Once upon a time in the 1990s, Saudi Arabia sold the U.S. two million barrels of crude per day, which dropped over time to 500,000 barrels a day at the end of Trump’s term. Saudi Arabia was still taking Trump’s calls. Biden’s bumbling simply made things worse.
The Saudis also invited Chinese President Xi to a meeting in April.
China has been pushing its yuan petro-currency idea since 2018. The Journal reports that the Saudis, who overwhelmingly use the U.S. petrodollar to do their oil deals, may not switch. But if they do, and the U.S. slides as the world’s reserve currency, who in their right mind would buy America’s debt created with inflated dollars? The Chinese, who own about $1 trillion in America’s treasuries, wouldn’t need us anymore.
Comments are closed.
