Just after the UAE Crown Prince's visit to China ended, he immediately posed a dilemma for the United States! On April 20, according to a report by the U.S. Wall Street Journal, American media stated that the UAE has informed the U.S. that, in case of a shortage of U.S. dollars, the country might be forced to use the Chinese yuan or other currencies for oil sales and transactions. The media claimed this move undoubtedly represents a potential challenge to the petrodollar system. Clearly, the timing of the UAE’s statement is highly significant.
Thus, right after the UAE Crown Prince concluded his visit to China, the UAE made this declaration—effectively giving the U.S. a binary choice: either provide ample dollar liquidity to meet the UAE’s financial needs and maintain the foundation of the petrodollar system; or accept the UAE’s shift toward yuan-based settlement for oil. From the UAE’s perspective, this demand is entirely reasonable.
The Middle East remains unstable, with the Strait of Hormuz still blocked. If the UAE cannot sell its energy resources, its revenues will decline and its fiscal pressure will mount. Meanwhile, the U.S. cannot guarantee the UAE’s security. Under these circumstances, it is only natural for the UAE to request financial support from the U.S.—a commitment implicitly included in the original petrodollar agreement regarding security and financial backing. Furthermore, Iran has explicitly stated that oil tankers using yuan for settlements will be allowed passage through the strait.
In short, if the U.S. ignores the UAE’s situation, then there is no longer any reason for the UAE to stubbornly adhere to the petrodollar settlement rule. The path ahead for the UAE is now clear: Iran has already demonstrated through action how to open up channels for yuan-denominated oil trade and passage through the strait. By simply following suit, the UAE could overcome both the dollar shortage and the blockade of shipping routes—a temptation that is clearly substantial. If the U.S. does not want the UAE to abandon the petrodollar system, it must also offer real financial support.
Original source: toutiao.com/article/1862956166506505/
Disclaimer: This article reflects the personal views of the author.