No plans to ditch US dollars for oil trade: Saudi Arabia

RIYADH: Saudi Energy Minister Khalid al-Falih said on Monday there was no change to the kingdom’s long-standing policy of trading oil in US dollars.

“Absolutely not. There is no change whatsoever to our long-standing policy,” Falih said when asked to comment on the possibility that Saudi Arabia could ditch the dollar.

Saudi Arabia is threatening to sell its oil in currencies other than the dollar if Washington passes a bill exposing OPEC members to US antitrust lawsuits, three sources familiar with Saudi energy policy told Reuters last week.

They said the option had been discussed internally by senior Saudi energy officials in recent months. Two of the sources said the plan had been discussed with OPEC members and one source briefed on Saudi oil policy said Riyadh had also communicated the threat to senior U.S. energy officials.

The chances of the US bill known as NOPEC coming into force are slim and Saudi Arabia would be unlikely to follow through, but the fact Riyadh is considering such a drastic step is a sign of the kingdom’s annoyance about potential U.S. legal challenges to OPEC.

In the unlikely event Riyadh were to ditch the dollar, it would undermine its status as the world’s main reserve currency, reduce Washington’s clout in global trade and weaken its ability to enforce sanctions on nation states.

“The Saudis know they have the dollar as the nuclear option,” one of the sources familiar with the matter said.

“The Saudis say: let the Americans pass NOPEC and it would be the US economy that would fall apart,” another source said.

A US state department official said: “as a general matter, we don’t comment on pending legislation.”

The US Energy Department did not respond to a request for comment. Energy Secretary Rick Perry has said that NOPEC could lead to unintended consequences.

NOPEC, or the No Oil Producing and Exporting Cartels Act, was first introduced in 2000 and aims to remove sovereign immunity from US antitrust law, paving the way for OPEC states to be sued for curbing output in a bid to raise oil prices.