US dollar's dominance in oil markets may face challenge as Saudis reportedly eye yuan-based sales deal with China

The world's top oil exporter and the world's biggest oil importer could shake up the US dollar's dominance in the global market.

According to a Wall Street Journal report, Saudi Arabia is in talks to sell oil to China and be paid in Chinese currency.

Saudi Arabia has exclusively used the dollar in its oil deals since 1974. The dollar would be weakened as Beijing looks to challenge US leadership in financial markets if a Saudi-yuan deal were to be made.

According to the Journal, the likelihood of a deal between Saudi Arabia and China has increased recently. The US has become unpopular with the ally due to its reluctance to do more in the Yemen civil war and its push to revive the Iran nuclear deal.

In 2020, Biden promised to make Saudi Arabia a pariah over the murder of a journalist. Since becoming president, he has made it clear that he does not consider Saudi Arabia as an ally, but as a partner.

Saudi Crown Prince Mohammed bin Salam turned down a request for a call with Biden to discuss the sanctions against Russia.

Saudi Arabia was China's primary crude supplier last year. The US has become less dependent on Saudi oil in recent years due to the boom in domestic production.