Media: China tries to negotiate with Saudi Arabia on payments for oil in yuan

Alexey Belogoryev, Deputy Principal Director on Energy Studies of the Institute for Energy and Finance, commented to Business FM on the reasons and prospects for the partial transfer of payments for oil supplies from Saudi Arabia and Russia to China in yuan.

Alexey Belogoryev discusses the new trend of increasing the share of yuan in the oil market:

- Calculation in yuan or another currency is always tied to the trade ratio, if a country imports something in one currency, it must export in this currency and vice versa. The same can be said about Russia, if imports are relatively small, that is, they are much less than exports, then, of course, it makes no sense to completely convert trade into the currency of the importing country. Accordingly, if Saudi Arabia intends to significantly increase the import of Chinese goods, then it can gradually increase the volume of oil sales in yuan, that is, these are interdependent values.

- Can be harbingers of such negotiations in the near future?

- Now there is a rather difficult and unusual situation on the world oil market, connected with the embargo on Russian oil in the EU. Now it is probably not quite timely to say that Saudi Arabia is able and ready to increase supplies to China; rather, Saudi Arabia may lose some more supplies in the coming months, as it did in the fall. Now it is unlikely that the topic of negotiations between China and Saudi Arabia will be an increase in supplies. I think they will focus on investment, including Saudi Arabia, which seems to be interested in large-scale investment in its new economy - the industries that it relies on in the future, after the decline of oil, there will be investments in the green energy, the construction of new cities, and of other technologies.