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Is Saudi Arabia Preparing to Implode the Dollar?

The news today from Saudi Arabia about a price cut in crude oil to Asia is not shocking but the quiet behind the scene reasons might well shock the world. First the story from Reuters:

Saudi Arabia lowers Oct Arab Light crude prices to Asia

Excerpt:

Saudi Arabia lowered October official selling prices (OSPs) for its flagship Arab light crude it sells to Asia by nearly $4 a barrel, marking the first reduction in four months, the country’s state oil producer Aramco said on Tuesday.

Now why in the world would Saudi Arabia do this?

If one is to believe the financial media, it is because the slowdown which the West says isn’t happening is impacting the ability of Asia to pay the higher prices. This could be a goodwill gesture to the struggling nations of the region to maintain a strong relationship with their customers. But if one starts to dig around behind the scenes, there is a bigger story lurking in the background, so give this author a wide berth as I attempt to tie together the various players and the potential end result.

Over the past four months, while the House of Saud has been using Israel and the United States to threaten Tehran, there have been a series of secret meetings designed to improve relations. In fact the discussions are to the point where Kuwait and the United Arab Emirates have resumed full diplomatic relations with Iran (via VOA News August 23, 2022):

Iran Resumes Diplomatic Relations with UAE and Kuwait, Talks Continue with Saudi Arabia

OilPrice.com follows up with this great article by Simon Watkins today:

Saudi Arabia And Iran Held Secret Meetings To Bolster Collaboration

From the article linked above:

In sum then, a rogue state, and the former number one ally of the U.S. in the Middle East, have been chatting away for months, hosted by a country which, following the U.S.’s ‘end of combat mission’ last year, appears to be drifting into civil war; so, what is going on precisely and where does it lead? As OilPrice.com has uniquely been highlighting for several months, Saudi Arabia’s days of being counted on by the U.S. as an ally are over. A key signal of this shift – over and above all the other signs since the end of the 2014-2016 Oil Price War, as analysed in depth in my latest book on the global oil markets – were comments about Iran made by Saudi Crown Prince, Mohammed bin Salman (MbS) last year. At the end of April 2021, he stated very publicly that he seeks: “A good and special relationship with Iran…We do not want Iran’s situation to be difficult; on the contrary, we want Iran to grow… and to push the region and the world towards prosperity.” This comment, as highlighted by OilPrice.com at the time, followed the first in what has now transpired to be four further meetings in Baghdad between senior figures from the Iranian and Saudi regimes, the first of which was personally brokered by then-Iraq Prime Minister, Mustafa al-Kadhimi. The existence of these talks was subsequently confirmed by an Iraqi government official, although neither Riyadh nor Tehran formally acknowledged them at the time. 

The emphasis on the link within that quote is my own because it reflects a growing discomfort with the United States as an ally in the region. After the Kabul debacle in 2021, the horrific vilification of Riyadh by President Biden over the oil price surge with associated insults to the Royals in 2022, and then the refusal to guarantee anything remotely close to the peace initiatives of his predecessor, the House of Saud has had enough. The need for alternatives to Washington’s hegemony is something the royal houses of the region have become acutely aware of, especially after the collapse of Europe as an economic power this summer.

While Russia might not be the most reliable economic ally, at least their foreign policy is consistent and who does anyone reasonable not think is acting as a mediator between the two nations? Putin would love nothing more than to peel the Saudis away from the tentacles of D.C. while creating stability between Iran and Saudi Arabia. In the mean time, Russia has absolutely no problem with the OPEC nations in the region developing closer ties with Tehran and yes, Beijing.

Thus the big power play, of which the US arrogance in Washington appears to be oblivious to, seems to be underway. The question is when will the world begin to understand the implications of this? When this meeting is confirmed:

Xi Jinping to visit Saudi Arabia, after Biden’s visit

While the Western guessing game continues to offered wild hunches about his visit to the Kingdom this year as this article was incorrect also, the truth is nothing will happen until after the Chinese Communist Congress on October 16, 2022. After that gathering and Xi securing another term, there would be a stronger inclination for President Xi to visit Riyadh and other regional allies to bolster the Chinese presence in the region to solidify his domestic power base. Unfortunately for the blind Washington war hawks there is an ulterior motive which the West refuses to acknowledge.

If one reviews the actions of the BRICS nations thus far, there is a new bipolar world developing despite denials by the West in the guise of American and European chest thumping threatening their dominance. The truth is that a bilateral trade agreement with most of the OPEC+ nations to follow the lead today with Russia would be of great strategic and economic interest to Beijing:

China agrees to pay for Russian gas in roubles and yuan: Gazprom

From Al-Jazeera:

Russia’s energy giant Gazprom says it has signed an agreement with China to start payments for gas supplies to China in yuan and roubles instead of US dollars, in a sign of warming relations between Beijing and Moscow, which is under Western sanctions.

“The new payment mechanism is a mutually beneficial, timely, reliable and practical solution,” Gazprom CEO Alexei Miller was quoted as saying in a statement following a video conference meeting with the head of China’s oil group CNPC, Dai Houliang.

Now imagine what happens to the US Dollar, the proverbial petrodollar of trading lore for decades now, should Saudi Arabia and other Middle Eastern allies follow suit and begin trade with China in Yuan and Russia in Rubles along with those nations reciprocating using the Saudi Riyal. Then take that initial earthquake and multiply that by a factor of 100 if the OPEC+ nations abandon the Brent/WTI model and elect to cast aside seventy years of economic serfdom to the dollar, pound, and Euro in favor of their own sovereign currencies.

In other words, what happens should Saudi Arabia joins the BRICS nations officially and becomes the leader for the OPEC world in refuting the insane economic and militaristic political policies initiated since the end of World War II in favor of free trade and a new regional peace?

It would mean an almost immediate death of the dollar as other nations with products or resources the rest of the world actually needs refuses to import American debt and inflation at the expense of their citizenry. At the same time, it eliminates the need for these nations to remain dependent on American military mercenaries offering “protection” in exchange for their use of the dollars in international trade.

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