Russia is now the top crude oil exporter to China.
It appears that Russia is reaping the rewards of dumping the dollar.
At the the beginning of the decade the Saudi share of Chinese crude imports was around 20%, while Russia’s was below 7%…
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But that has changed and as the Russians creep in, the Saudis are starting to get nervous.
Russia Insider reports:
Now the Saudis find themselves neck and neck with Moscow for the lead in Chinese market share, with both performing in the 13-16% range. But Russia’s share continues to rise, as The Kingdom struggles to maintain a foothold.
Why? Analysts attribute Russia’s huge market share growth to its willingness to accept yuan, while Saudi Arabia is still clinging to blood-soaked dollars. As Business Insider notes:
Interestingly, part of Russia’s success in China has been attributed to its willingness to accept Chinese yuan denominated currency for its oil.
This is consistent with earlier forecasts about Russia’s market share in China. Bloomberg reported back in July:
“Following Russia’s recent acceptance of the renminbi as payments for oil, we expect more record high oil imports ahead to China,” Gordon Kwan, the Hong Kong-based head of regional oil and gas research at Nomura Holdings Inc., said in an e-mail, referring to the Chinese currency. “If Saudi Arabia wants to recapture its number one ranking, it needs to accept the renminbi for oil payments instead of just the dollar.”
As both the head of the Eurasian Economic Union (and founding member of BRICS), as well as a major energy exporter, Russia is leading the charge against the dollar. And now other nations are following suit: Iran and India announced last month that they intend to settle all outstanding crude oil payments in rupees, as part of a joint strategy to dump the dollar and trade instead in national currencies.
The dollar is slowly losing its privileged place in international transactions. What this means for the United States is anyone’s guess.