The world's largest economies by 2050: Saudi Arabia's nuclear programme
Saudi Arabia's decision not to renew its era-defining security agreement with the United States, the sale of oil for dollars, reflects both America's declining global influence and where most Saudi oil is now sold.
“The world’s largest economies by 2050” (Saudi Arabia’s nuclear programme)
Saudi Arabia’s decision not to renew what was once its key security agreement with the United States — the sale of oil for dollars — reflects not only America’s declining influence in the world but also where most of Saudi oil is now exported. As I noted earlier, by the end of 2022 the largest buyers of Saudi oil were China (23.8%), Japan (14.6%), India (13.9%), South Korea (13.8%), Europe (9.5%), South-East Asia (9.4%), the United States and Canada (8.1%) and Taiwan (4.4%). In 2000 the main buyers were the United States and Canada (21.5%), Taiwan (17%), Europe (16.6%), Japan (15.5%), South Korea (11%), South-East Asia (9.6%), South Africa (3%), China (1.6%) and India (1.6%). In other words, the combined share of the United States, Canada and Europe fell from 38% in 2000 to 18% in 2022. Over more than 20 years the share of China and India rose substantially, from 3% to 38%.
“The world’s largest economies by 2050” (Saudi Arabia’s nuclear programme)
Saudi Arabia can now sell its oil in any currency: dollars, yuan, euros or Japanese yen. The Shanghai International Energy Exchange (INE) also launched yuan-denominated oil futures in 2018, making it easier for oil-producing countries to sell their crude in yuan. It should be said, though, that the United States has itself become almost self-sufficient in oil: domestic output has risen to 12.9 million barrels a day, more than Saudi Arabia produces (9.7 million b/d), so it buys far less Saudi crude. According to The Wall Street Journal, nearly 80% of world oil sales are still settled in dollars. A growing number of countries, including Russia, Iran, Saudi Arabia, China and India, are switching more actively to settlement in other currencies, which gradually weakens the dollar’s position as the world’s reserve currency. Given the above and the close economic ties developing between the Kingdom and China, Saudi Arabia may also entrust China with the development of its nuclear programme, or part of it.
“The world’s largest economies by 2050” (Saudi Arabia’s nuclear programme)
Although economic ties between China and Saudi Arabia have deepened in recent years, the American company Westinghouse still has good odds. For now, however, its chances are hindered by the deterioration in relations between the Kingdom and Israel over the Palestinian-Israeli war in the Gaza Strip. That same deterioration also prevents the Kingdom from concluding a defence agreement with the United States, including security guarantees and supplies of modern weapons. Whether Westinghouse is chosen as the main contractor for the Kingdom’s nuclear programme will depend on normalisation with Israel and the conclusion of a US defence agreement. The further prospects for the country’s nuclear programme are likely to become clear only after the US presidential election in November this year.