Saudi Arabia, Once Again, Threatens USA To Sell Oil In "Other Currencies" Like Chinese Yuan: Analysis & Impact

The first time we argued about the rising animosity between Saudi and USA was in Dec 2014.

This chart is from the advisory that we had prepared for our clients back in Dec 2014.

This chart shows when America began producing more oil than Saudi Arabia in 2014 after 22 years.

Ever since, Saudi has struggled in it's oil sales, has run out cash, is busy selling it's top most companies, has run 6 years of budget deficit while borrowing tens of billions every year, passed new taxes and fines, removed subsidies on petrol, water, electricity bills, deported millions of expats, has arrested thousands of Saudis and taken their trillions, major companies like Saudi Oger have collapsed, large banks are merging and thousands of small businesses have shut etc.

Some powerful friends of ours debated with us in 2014 that animosity between Saudi and America simply was not possible. However, now about 4.5 years later, we can say that we have been correct all along while the Saudi empire is crumbling.

We can also show you one more article from our message of Dec 2014 which is pretty much impossible to be published by any major media today because it will cause such a crisis.

The major ratings agencies cannot see the reality that after 6-7 years of lower or static volumes of Saudi oil sales, higher domestic oil consumption, continuous ridiculously low price of oil, massive borrowings, animosity with America, civil wars impacting trade in the region, bankrupting airlines and banks etc due to which the Gulf states have been destroyed from within.

You can see what the cost of production and price of oil that needs to be in order to balance the budgets of oil producing countries. The oil prices necessary to balance a budget are shocking.

Massive borrowings can only result in future defaults since Gulf states have no other means of paying back the billions in borrowed money besides from sale of oil. 

8 Sept 2014: FACTBOX-Oil prices below most OPEC producers' budget needs

Now on 5 April 2019, Saudi has once again threatened the USA with selling oil in non USD currencies.

5 Apr 2019: Exclusive: Saudi Arabia threatens to ditch dollar oil trades to stop 'NOPEC' - sources

"Saudi Arabia is threatening to sell its oil in currencies other than the dollar if Washington passes a bill exposing OPEC members to U.S. antitrust lawsuits, three sources familiar with Saudi energy policy said."

"“The Saudis know they have the dollar as the nuclear option,” one of the sources familiar with the matter said."

Whether USA will finalize this law which is anti Saudi in order to protect itself remains to be seen.

We believe that Trump will use this law which is yet to be passed as a negotiating card with Saudis behind closed doors.

But these matters are so complex now and no longer easy to predict because there are so many things that get impacted.

Saudi owns a massive refinery in USA that could impact domestic supplies within USA, Russia and other oil producing nations may not been keen to disrupt USD because it will cause chaos and uncertainty worldwide, US shale oil still needs to be mixed with Middle Eastern crude in order to be refined among other factors.

There is another article about USD that has come stating that USD is in a major downward spiral.

4 Apr 2019: The dollar is on a downward spiral as US policies turn countries against the greenback

This is an interesting video as well.

5 Apr 2019: Saudis threaten to ditch dollar: Call their bluff?

Meanwhile, on 6 Apr 2019, USA threatened Iran that America may sanction Iranian Army and categorize it as a "terrorist organization".

This will be the first time ever a country is unilaterally planning to sanction the army of another sovereign country and plans to label it as a terrorist organization.

We believe this action is linked to USA coming under pressure by Saudi and trying to push back the rising influence of Iran in the Middle East which is also part of the very complicated relationship between USA and Saudi that is also linked to sale of oil in non dollar currencies.

This will have massive ramifications worse than even the bans and sanctions on Iran because it creates uncertainty on all American and other military bases in the Middle East of which there are many plus on all American interests.

Iran has previously threatened that they could block Strait of Hormuz off Iran and Fujairah which they have never done so but 40% of the world's oil passes from there which is what makes it a nuclear option for Iran as well.

If Iran passes their retaliatory law, it will mean that all US military bases across the region become a threat as a military base of a "terrorist country" which is America.

We hope calmer thoughts will prevail and all of this subside and America will not make the stupid decision to target the army of another nation, however much they hate Iran or however much Saudi puts pressure on America, but wiser heads must prevail and let this silly threat pass away.

6 Apr 2019: Iran to blacklist U.S. military if Washington designates Guards as terrorists: MP

7 Apr 2019: Iranian parliament drafting bill to designate U.S. army as terrorist if IRGC blacklisted 

7 Apr 2019: New Iranian Bill Designates US Military as 'Terrorists' - Report

America has not achieved much with it's sanctions on Iran except hurting the public of Iran since 1978. To think that such rhetoric will achieve much is foolish on the American side.

Because part of the equation is also the gas reserves of Qatar and Iran which is majority of gas reserves in Middle East and some of the largest in the world, infighting within all Middle East nations and with each other, lack of cash reserves and inability to send more USD to America, civil unrest in majority nations in Middle East and the presence of American and other military bases inside most of these nations.

With so many variables at play, no wonder, no one can understand who will do what next?

But we know for sure, that Saudi and UAE need to take action against USD by accepting non USD currencies for their oil because they have no choice but to sell more of their oil to China plus Asia (which is where the growth is) who are reluctant to buy unless it is in their local currencies (i.e. anything but the USD).

If Saudi & UAE do not accept yuan, their oil sales will keep dwindling & they will go bankrupt at double speed rather than their single speed bankruptcy that already began in 2014.

We had written last time on 1 Oct 2018 when Trump openly humiliated Saudi Arabia but on 2 Oct 2018, Jamal Khashoggi incident happened due to which Trump and Americans have gone into a quiet and hidden mode.

1 Oct 2018: Trump Humiliates Saudi King In Fight Over US Dollar Hegemony; Issues Warning To Saudis Saying "Who Knows What Will Happen"

Saudi had done the same thing to Obama in 2014 which we will pull out of our original message of Dec 2014 whereby Obama was "thrown out" of Saudi and a pre arranged dinner meeting with sitting US President Obama was cancelled by the Saudi King at the very last minute.

This kind of news is almost impossible to find unless you know where to get it and what you are looking for which is why they are known as secrets and behind the scene maneuverings.

But such incidents have very powerful ramifications on all of us which is why it's important to know what's going on in the world of US dollar and between Saudi and USA.

This is from Mar 2014:

29 Mar 2014: King Abdullah Kicks Obama Out of Saudia Arabia Video Added

We also warned last time on 15 Oct 2018 that Saudi will need to accept non USD when they threatened America in writing for the very first time.

15 Oct 2018: Saudi Standoff Could Lead To Pricing of Oil in Chinese Yuan Eroding US Dollar Superpower Status!

This decision to detach from the USD is very very difficult and that's why so many trade offs are happening behind the scenes are all inter connected.

For example, Khashoggi murder has been sidelined by Trump for the greater good.

Trump has gone quiet despite him and his team members sending regular messages on TV that Saudi will pay. But after the Khashoggi incident on 2 Oct 2018, all the rhetoric from America has stopped.

Saudi and USA are negotiating everything from military purchases to military bases while Saudi and UAE have formed a joint union and nullified the GCC agreement in order to keep ready a "Plan B", placed bans on Iran and Qatar and are fighting a horrendous war in Yemen, at the same time Saudi and UAE are also negotiating with Russia and China for arms and military support plus higher sales of oil and investing billions in both China and Russia as "Plan B".

This struggle to come out ahead of each other cannot have any winners and is one of the most complex decisions of the 21st century that will eventually impact almost everyone.

America will lose it's US dollar hegemony while China has everything to gain as the torch of being a "super power state" moves to China and gets firmly handed over to China.

The final and the most pivotal decision in this move towards a world gravitating to China is the decision that has to be made by Saudi and UAE whether to accept yuan or not, for sale of their oil.

We believe that there is a more than 85% chance of Saudi/UAE accepting yuan within 2019.

All these articles above are must read to understand how complex and tense the entire situation is and how pressure on Iran, Chinese Yuan currency, sale of oil globally, Syrian civil war, Qatar ban, USD hegemony, American military complex etc are all interconnected in this war of global supremacy.

We will eventually see Saudi accepting non USD currencies like Yuan and the entire cost will be borne by all of us because of the global impact that this single decision will have.

Dollar will lose value, China will become more powerful, depegging/devaluation of GCC currencies will occur, asset values will drop, oil would be sold in non USD which will split every country because everyone would want to put this as a pre condition to buy from GCC countries.

Since UAE and Saudi benefited the most from the rise of USD, their pegged currencies and their sale of oil exclusively in USD over the last 45 years, therefore, they shall hurt the most if the USD currency won't remain as the sole exclusive currency for sale of oil in this world.