Money is complicated. I can think of maybe 5 people in the world that I know get it. Saudi oil for yuan is a meaningless headline. You should scoff, you should roll your eyes and you should have contempt for the journalists who publish it without understanding its meaninglessness.
Wake up and smell change, smell the fear in the nostrils of autocracies. 2 weeks ago I wrote that high oil prices are the death to price monopsonies. That the last 40 years were the anomaly and that fixed dollar pegs might prove unsustainable…that their low volatilities were today’s gold.
It seemed like hyperbole then, but seems less so with each passing day. Are you watching Yuan Renminbi volatility?? Saudi autocrats survive via a fragile equilibrium. They live in the shadow of a dollar peg. It bestows upon them continuity & stability. Unnatural forms of safety (low volatility) however, breeds complacency…
They need a preponderance of dollar assets to ensure their survival, via the peg. So enjoy the spectacle of them trading their precious oil for funny money but recognise that they’ll need to own $ assets to preserve that umbilical cord keeping them in power.
Me ? Personally I’d be done with them, more trouble than they’re worth. It is a crime of the highest order that the US imports foreign oil. Frack to the limit and join up those bloody pipelines, the US has a virtually infinite supply of natural gas. Then wind/solar/green hydrogen. Allez !
They’re bold. The audacity not to respond to the White House. .. well in my world there would be consequences. But it’s really quite a sight to see all these autocrats lining up to fail to “get” today. Xi for life?? Let the winds of volatility take down their hubris…