It is getting worse for the Dollar

In light of the latest financial and geopolitical turmoil, the US dollar is under a lot of international pressure for many reasons, the latest being the bilateral agreements between China and Saudi Arabia. This led to the proposition of using the Yuan China's currency for the settlement of oil trades between the two countries. As you may know for the past half century this spot was only reserved for the US dollar, but with the decline of American hegemony and with the increasing tensions between Saudi Arabia and the US during the Biden administration, Riyad is moving away from Washington.

The Chinese also managed to secure the construction of petrol refineries in China, financed by Saudi Aramco a huge project worth 12.1 Billion Dollars.

This will lead to an increase in Chinese independence from energy imports and will able Saudi Arabia to secure a big buyer that will able to provide cash flow in any event of US sanctions or demand reductions in US markets.

We can't talk about Chinese and Saudi relations without talking about the latest peace treaty between Iran and Saudi Arabia of whom the broker is none other than China. This is maybe the most important geopolitical move in the middle east region since the Abraham accords. Iran and Saudi Arabia's historical rivalry leading countless proxy wars in the region just hit its lowest in 5o years. Not only does this move intends to secure peace in the area and therefore more safe and secure oil export to China but this also put the US in a very bad position, because usually it is the one leading international talks between rival and this has been the trend since the 1950s and especially after the fall of the Soviet Union.

If it wasn't that bad already the same day the Saudi-Chinese pact happened, Brazil the biggest and most populous country in South America struck a deal with China. The deal, announced Wednesday, will enable China and Brazil to carry out trade and financial transactions directly, exchanging yuan for reais – or vice versa – rather than first converting their currencies to the U.S. dollar. This is a huge blow to US hegemony especially in South America which has been for years considered America's backyard.

The long-term importance of this agreement also comes from the fact that Brazil is an economic powerhouse, rich in resources, and has a big young population all of that fuelled by Chinese investments could enable the country to become a superpower.

Another similar move, this time in Europe joined China and France. They completed an LNG gas trade using the Chinese yuan, thus ending the reliance on the US dollar for energy trades. Moreover, Reuters reported that the transaction involving 65,000 tonnes of LNG from the UAE marked the first yuan-settled LNG trade through the Shanghai Petroleum and Natural Gas Exchange. France's historical and strategic US ally, NATO member, and a major player on the international scene is a critical loss for US foreign policy and trade efforts.

All of this news coming out the same day is nothing more than a huge coordinated attack by the Chinese on the Dollar and the US. This is the result of two decades of Chinese expansionist policies, and a desire of many countries to gain more freedom from the current American government's fallen hegemony. Some could argue that the extensive use of sanctions by the current and past administrations led countries to want to develop some kind of immunity to the American financial hammer.

But will this be really a moment of emancipation and freedom for those countries or China will be the sole entity to take this power vacuum?

It will be interesting to see how the US government will react or respond to these measures. This is currently a critical time on all levels for the US, it will need to show up to the game even in times of crisis to keep its uncontested seat as the sole world superpower.