China has held several discussions with countries in the Middle East and North Africa about conducting trade using its local currency.
The United Arab Emirates was part of a historical transaction carried out on China’s national energy trade platform this week.
What happened: China conducted the first ever yuan-settled energy deal involving some 65,000 tons of Emirati liquified natural gas (LNG). The transaction was carried out by China National Offshore Oil Corporation and France’s TotalEnergies through the Shanghai Petroleum and Natural Gas Exchange, the exchange reported Tuesday.
TotalEnergies told Reuters that the transaction involved LNG imported from the UAE, but gave no further comment.
Why it matters: China has repeatedly held discussions with countries in the Middle East and North Africa about conducting trade using its local currency.
Last month, Iraq’s Central Bank said it will conduct trade with China in yuan. This is in part due to the country experiencing a shortage of US dollars as it faces restrictions from the US Federal Reserve that is seeking to stop dollar transfers to sanctioned Iran.
In January, Saudi Finance Minister Mohammed Al-Jadaan said in a Bloomberg interview at the World Economic Forum in Davos that the kingdom is open to trading in currencies other than the US dollar in order to “improve trade.” This echoed his comments from last year stating that the kingdom is considering pricing oil sales to China in yuan.
Egypt announced its plans to issue bonds in yuan in August 2022. Israel added the yuan, along with the Canadian and Australian dollar to its foreign reserves last April.
Know more: During a visit to Saudi Arabia in December, Chinese President Xi Jinping called on Gulf countries to make use of the Shanghai Petroleum and Natural Gas Exchange to carry out energy transactions in yuan.