On June 9, 2024, Saudi Arabia is expected to announce that it will not extend the 50-year Petrodollar Pact signed between the US and Saudi Arabia on June 6, 1974, which expires on June 9, 2024.

Saudi Arabia has received an invitation to join BRICS and its move towards dedollarization. This shift includes acceptance of other currencies such as the Chinese yuan for oil sales, as reported by the Wall Street Journal on March 15, 2022.

BRICS: What Happens if Saudi Arabia Stops Accepting US Dollar for Oil?

September 9, 2023

First and foremost, the weakening of the U.S. dollar would begin if Saudi Arabia accepted local currencies for oil trade. If Saudi Arabia demands that other countries pay in local currencies only, then demand for the U.S. dollar would dip drastically. The move could lead to the dollar facing a depreciation in the international forex and currency markets. A weak dollar would make imported goods more expensive in the United States and potentially impact the overall U.S. economy.

Secondly, other nations will begin to diversify their reserves and accumulate other currencies apart from the U.S. dollar. The development would increase demand for other local currencies and put them in direct competition with the dollar. Central Banks around the world will keep reserves of all currencies and commodities like gold, making the USD dip.

Thirdly, and in conclusion, Saudi Arabia might not make such a decision as their currency, the Riyal, is pegged to the U.S. dollar. Therefore, if the dollar dips, the Saudi economy could face implications that could hamper the kingdom’s wealth and local currency.

https://watcher.guru/news/brics-what-happens-saudi-arabia-stops-accepting-us-dollar-for-oil

Although Saudi Arabia has not yet officially joined BRICS, it has been participating in BRICS events and has sent representatives to attend Sherpa meetings in Russia. The price of the sale of the state owned Aramco shares will be announced on June 7th. The Petrodollar Pact between the US and Saudi Arabia expires on June 9th.

Saudi government to raise up to $12 bln from new Aramco share sale

May 30, 2024

Saudi Arabia is selling a stake of roughly 0.64% in state oil giant Aramco in a landmark deal as the kingdom proceeds with Crown Prince Mohammed bin Salman’s plan to diversify the economy.

Saudi Arabia is offering 1.545 billion Aramco shares at between 26.7 and 29 riyals, which means it would raise nearly $12 billion at the top end of the range, according to a filing. It aims to announce the final price on June 7. The government may sell additional shares through a so-called greenshoe option.

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Since the IPO, Aramco has remained a cash cow for the Saudi government, financing a mammoth economic drive to end the kingdom’s “oil addiction”, as the crown prince once called it.

The latest deal will allow the kingdom to finance large domestic projects tied to that agenda, said Hasan Alhasan, senior fellow at the International Institute for Strategic Studies.

Having missed its target for foreign direct investment and with a budget deficit of up to $21 billion in sight, “the kingdom is resorting to the sale of equity in Aramco and to debt issuances”, he said.

“The kingdom is likely to continue redirecting capital to other sectors including renewable energy, technology, tourism, logistics and manufacturing, which Riyadh hopes will constitute sources of long-term economic growth,” he added.

https://boereport.com/2024/05/30/saudi-government-to-raise-up-to-12-bln-from-new-aramco-share-sale/