On June 18th, Caixin reported that some regional media claimed that the US-Saudi oil-dollar agreement had "expired," which means that Saudi Arabia will sell oil in multiple currencies (not just in US dollars).

These reports were widely spread by cryptocurrency enthusiasts on social media, but were subsequently refuted by some financial analysts and economists.

Paul Donovan, Chief Economist of Global Wealth Management at UBS Group, said, "Many cryptocurrency speculators are desperate to convince people of the end of the dollar. If their ideas are validated, it will encourage more people to ignore reality. This investment strategy is not clever." He added, "Oil transactions have always been able to be conducted in non-US dollar currencies. The Saudi riyal is still pegged to the US dollar, and its financial assets are centred around the US dollar. The reserve status of the US dollar depends on how its currency is stored, not how transactions are priced."

He added, "Oil transactions have always been able to be conducted in non-US dollar currencies. The Saudi riyal is still pegged to the US dollar, and its financial assets are centred around the US dollar. The reserve status of the US dollar depends on how its currency is stored, not how transactions are priced."

The dominant position of the US dollar

Approximately 80 percent of global oil sales are conducted in US dollars, and according to an informal agreement with the United States, Saudi Arabia conducts a large amount of its oil transactions using US dollars.

Motonobu Kondo, a Senior Researcher at the JIME Centre of the Japan Institute of Energy Economics, said, "Since the 1970s, the United States has been pressuring Saudi Arabia to sell crude oil in US dollars in order to maintain the dollar's position, as well as to demand that Saudi Arabia purchase US bonds and weapons."

According to US government data, Saudi Arabia increased its holdings of US bonds for the eighth consecutive month in March of this year, reaching $135.9 billion, a 3.66 percent increase from the previous month.

China is now Saudi Arabia's largest trading partner and crude oil purchaser. In the past two years, Saudi Arabia has considered trading commodities in yuan.

Saudi Arabia has always sought to maintain balance between its partnership with major security ally the United States, and its cooperative relationships with China and Russia (the major energy partners within OPEC+).

Last year, China and Saudi Arabia signed a local currency swap agreement valued at $7 billion, as part of the effort to promote local currency trading and reduce dependence on the US dollar.

Kondo said, "The Saudi riyal is pegged to the US dollar, and revenues from oil sales are received in US dollars for easier budget planning. In addition, the US dollar's dominant status as the world's main reserve asset has not changed, indicating that Saudi Arabia lacks the incentive to turn to other currencies."

Supporting economic stability

Abu Dhabi Commercial Bank, the third-largest bank in the United Arab Emirates, also expects that the Saudi riyal will remain pegged to the US dollar in the near and medium terms.

Monica Malik, chief economist at the bank, said, "The peg of the riyal to the US dollar, along with inflation expectations, supports currency and macroeconomic stability."

"When Saudi Arabia needs to increase overseas investment to support its transformation plans, the peg to the US dollar is also crucial for inflows of foreign direct investment."

As part of the 2030 Vision plan, Saudi Arabia requires hundreds of billions of dollars to transform its economy and move away from oil exports. The plan relies on attracting significant domestic and foreign investment, with some large-scale projects still requiring massive amounts of funding.

According to Mohammed Al Jadaan, Saudi Arabia's finance minister, in an event in April of this year, Saudi Arabia will adapt to current economic and geopolitical challenges and adjust some projects through either actions of "reduction" or "acceleration" of investment.