UAE tells US it may abandon the petrodollar in favour of the yuan – WSJ

(SeaPRwire) –   The UAE is said to have warned it might switch to the Chinese currency for oil transactions while seeking financial assistance from Washington

According to a Sunday report by the Wall Street Journal, the UAE has cautioned the US Treasury that it might be “compelled to utilize the Chinese yuan” for oil transactions.

Unnamed US officials told the outlet that UAE Central Bank Governor Khaled Mohamed Balama conveyed what the newspaper characterized as an “implicit warning” regarding the dollar’s supremacy during a meeting with US Treasury Secretary Scott Bessent in Washington last week.

Balama reportedly stated that Abu Dhabi might need emergency assistance to avoid a shortage of dollars if the economic repercussions of the US conflict with Iran keep escalating.

Tehran has employed a strategy of asymmetric pressure to increase expenses for Washington and its partners. The UAE suffered the most from Iranian retaliation against US military installations and other strategic sites, receiving an estimated 2,800 drones and missiles.

While the US Treasury could facilitate a currency swap, such deals are typically managed by the Federal Reserve. The WSJ noted that Fed approval for the UAE is improbable, pointing to a precedent from last year where the Treasury arranged a $20 billion aid package for Argentina ahead of a crucial election.

Formerly, the Trump administration suggested that Gulf nations could help offset the expenses of the Iran war. Harvard Kennedy School Professor Linda Bilmes estimated that the US incurred direct costs of $2 billion daily during the first 40 days of the hostilities.

Public criticism of US policy by figures connected to Gulf governments reflects growing Arab frustration. On Sunday, Abdulkhaleq Abdulla, a former advisor to UAE President Mohammed bin Zayed, urged the closure of US military bases in the country, deeming them a burden rather than a strategic asset. He instead proposed focusing on acquiring advanced US weapons as a defense strategy.

Iran has also begun collecting tolls from vessels passing through the Strait of Hormuz, which it views as neutral territory, requiring payments in yuan or cryptocurrencies. This approach aids in evading US financial oversight and potential sanctions.