Deutsche Bank Warns Petroyuan Could Challenge Dollar’s Role In Oil Trade

Saudi Arabia’s participation in mBridge was viewed as significant because of the kingdom’s role in global oil markets and the longstanding use of the U.S. dollar in international oil trade, Jason Ma reported for Fortune.

The U.S. dollar remains the dominant currency in global foreign-exchange markets, while the Chinese yuan’s international use has increased.

The broader “petrodollar” system emerged in the 1970s as oil-producing countries accumulated large dollar revenues and invested some of those proceeds in international financial markets.

However, the commonly repeated claim that Saudi Arabia entered a formal 1974 agreement requiring it to price all oil in dollars in exchange for U.S. security guarantees is an oversimplification.

Historical records do document extensive U.S.-Saudi financial and economic cooperation during the period.

The U.S. dollar remains the dominant currency in international finance. The Bank for International Settlements said the dollar was on one side of 89.2% of global foreign-exchange transactions in April 2025.

The Chinese renminbi accounted for 8.5% of global FX turnover.

Because oil is traded extensively in dollars, the currency has benefited from the financial and commercial infrastructure surrounding the global energy market.

Deutsche Bank has argued that the dollar’s role in cross-border trade is closely linked to the fact that internationally traded oil is generally priced and invoiced in dollars.

The dollar’s dominance has nevertheless faced challenges. Following Russia’s invasion of Ukraine in 2022, Western sanctions cut many Russian institutions off from parts of the dollar-based financial system.

Such sanctions have contributed to discussions in other countries about reducing their exposure to dollar-based financial channels.

Saudi Arabia has also explored closer financial and economic ties with China, including the possibility of greater use of the yuan in some transactions.

Deutsche Bank warned in March that the war involving Iran and disruptions around the Strait of Hormuz could accelerate the emergence of a “petroyuan” if oil payments to Iran are increasingly made in yuan.

Bloomberg reported that Deutsche Bank viewed the conflict as a possible catalyst for erosion of some aspects of the petrodollar system and greater use of the Chinese currency in oil trade.