For more than a decade, China has been waging a quiet offensive against the U.S. dollar, and the front line has been oil.
Beijing’s pitch to oil-producing countries has been simple: stop pricing your crude in U.S. dollars and start accepting Chinese yuan instead. Every barrel that trades in yuan is a barrel that doesn’t reinforce dollar dominance — and the dollar’s status as the world’s reserve currency is the foundation of America’s ability to borrow cheaply, sanction adversaries, and project financial power.
China has been making real progress. In November 2023, the People’s Bank of China and the Saudi Central Bank signed a $7 billion currency swap agreement — the first such deal between the two countries — designed to enable direct yuan-riyal settlement and bypass the dollar.
In June 2024, Saudi Arabia joined mBridge, the cross-border digital currency platform led by China and the Bank for International Settlements that has been processing tens of billions in yuan-based settlements. Russia now sells most of its oil in yuan. The dollar’s share of global foreign exchange reserves has slipped to roughly 57%, the lowest level since 1994.
Trump Flips The Petrodollar Script
Then Donald Trump returned to the White House — and the math started running in reverse.
It began with Venezuela. On January 3, 2026, U.S. special forces captured President Nicolás Maduro in a raid on Caracas. Trump declared at a Mar-a-Lago press conference that the United States would “run” Venezuela “until such time as we can do a safe, proper and judicious transition,” and announced that “very large United States oil companies” would “go in, spend billions of dollars, fix the badly broken infrastructure” and start selling Venezuelan crude.
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