The UAE’s exit from OPEC on May 1, 2026 immediately triggered a familiar wave of commentary warning thatthe petrodollar systemis under threat and thatChina’s yuanstands ready to displace the dollar in global oil markets. That narrative is not supported by the data, and it was not supported by the data the last time it circulated, or the time before that.
The petrodollar system, under which Gulf oil is priced and settled in U.S. dollars, with surplus revenues recycled into U.S. assets, has underwritten dollar dominance since the 1970s.
A data point that doomsayers focus on is that the dollar’s share of global foreign exchange reserves has fallen from a peak of roughly 72% in 2001 to approximately 57% today, which they cite as evidence of the dollar’s decline. However, the drop correlates directly with the expansion of the European Union and eurozone countries trading with each other in euros. And the euro’s gains in Europe do not represent broader internationalization as a reserve or trade currency.
The euro launched in 1999 with the original 11 eurozone members. Its reserve share climbed through the early 2000s as the EU expanded, peaking around 27–28 percent ofglobal reservescirca 2009, then declined and stabilized at about 20 percent, a share it has held for the last decade. Those gains are concentrated in Europe and its immediate neighborhood, including EU members, accession candidates, and a small number of non-EU states, such as Andorra, Kosovo, Montenegro, and North Macedonia (pegged), that use the euro by convention.
South American and Asian countries have not adopted the euro at all, except as a reserve currency in quantities consistent with global averages. Most importantly, the decline in the dollar’s share of reserves has not benefited the yuan. It has benefited the euro, and only within the eurozone.
The yuan’s share of global reserves is approximately 2.5 percent, barely changing over the past decade despite China being the world’s second-largest economy. ASEAN economies have not shifted to the yuan. India, a BRICS trading partner, does not hold significant amounts of yuan. Japan and South Korea are not holding the yuan as a primary reserve currency.
The yuan’s share of global payments through SWIFT sits at roughly 2.5–3 percent, and a disproportionate share of that is China-Russia bilateral trade, a captive arrangement driven by sanctions, not yuan attractiveness. Russia itself has been attempting to exit yuan accumulation because the currency is not freely convertible, and Chinese banks have been restricting transactions under pressure from secondary sanctions.
Another often-cited data point in the dollar-decline narrative is that China and Saudi Arabia were allegedly in discussions about pricing and trading oil in yuan. The claim rests on a single media report from March 2022 stating that Saudi Arabia and China were in active talks to price some oil sales in yuan and that Saudi Aramco was considering yuan-denominated futures contracts.
The Saudis may have first raised the possibility as early as 2019, according to Reuters, though those discussions led to no action and fell away during the COVID years. That report, based on exploratory and unconfirmed discussions, has since been recycled through Chinese state media and the Western financial press as though it represents a sustained trend toward de-dollarization.
No deal followed. No invoicing changed. During Xi Jinping’s December 2022 visit to Riyadh, where he attended the first China-Arab States Summit and the China-Gulf Cooperation Council Summit, he called on Gulf states to switch to the yuan for bilateral trade, including oil. Gulf producers showed no interest.
Source: The Gateway Pundit
