The global oil market trade involves oil-producing and non-oil-producing countries buying, selling, or exchanging crude oil and its products and derivatives. The UAE is a top destination for buyers and sellers in various markets; the oil market is among the biggest. The US Dollar (USD), one of the stronger currencies globally, is widely used in settling payments because of its wide acceptance. USD: Global Trading Dominance The USD is the worlds most significant reserve currency and remains in pole position in global markets. But many countries also settle trade in other currencies; the instances are increasing, leading many to speculate about the future of the USD and its value, especially in forex trading. New and emerging collaborations between countries open up exciting times for countries looking to trade away from the dominance of the USD. Although the USD remains in a strong position for international trading, a few other currencies are fast gaining ground to compete strongly with it. These economic advantages are slightly less than the disadvantage for countries with a currency pegged to the USD. The most significant disadvantage is the susceptibility to negative volatility whenever the USD performs poorly in global markets. This is pushing more countries to explore alternative currencies for international trade. Key advantages include lower trading costs, improved economic and political connections, and access to more markets. Some of the more common non-dollar oil trade partnerships are: China-Russia (Yuan-Rubles) The China-Russia oil trade has moved from the USD to direct trade between countries using their currencies. Today, Russia and China settle their oil and non-oil trades using Yuan and Rubles, reaching a new record volume. On 19 July 2023, China bought a record 2.6mn barrels per day after importing 11.4mn daily for the first half of 2023. Chinas oil imports from Russia have increased following Western sanctions on Russia. The China-Russia trade relationship has improved in leaps in recent years. Settling the trade in Yuan and Rubbles potentially reduces the cost of importing and exporting the product and benefits both countries by providing a means for direct trade as against the reliance on dollarized exchanges. China-UAE Oil Trade China is also a significant importer of UAE oil, having imported the equivalent of $8.36B worth of crude oil in 2021, besides petroleum gas and related products. China remains the worlds largest importer of crude oil and continues to build strong relationships with oil-producing countries. Chinas crude petroleum imports from the UAE hit $1.99B in May. China remains a significant trading partner of the UAE and Gulf Arab countries, buying and selling oil and non-oil products and services. Iran Trading in Euros Iran began pushing for Euro payments for its oil around 2016 and has successfully accepted the currency since. In March 2023, Iran approved 3 billion euros worth of crude oil for its armed forces, allowing a law enabling direct export by armed forces to fund its operations. Iran, also under sanctions, is actively exploring alternative currencies for settling international trade. Iran is also exploring trading conditions with China, as both countries reached an average of 1 million barrels per day in trade in the first six months of 2023. China is one of Irans biggest trading partners in oil. https://pixabay.com/photos/dubai-city-cityscape-skyscraper-1367094/ Saudi Arabia Open to Non-Dollar Trades Saudi Arabia is reportedly open to settling international oil trade in other currencies, which sees the Arab giants gradually moving away from the USD. Saudi Arabia will discuss exploring non-dollar currencies for oil and non-oil trades. Again, China is one of the countries pushing for Saudi Arabia to explore this option. In December 2022, Chinas President, Xi Jinping, visited Saudi Arabia on a state visit. President Xi met and discussed with Saudi Arabias King Salman bin Abdulaziz Al Saud. China and Saudi Arabia improved their relationship by discussing the possibility of using the Yuan for settling oil trades. The New BRICS Alliance The BRICS (Brazil, Russia, India, China, and South Africa) alliance is not new, contrary to the idea generated by renewed news coverage. BRICS has been around since 2009 after the first summit in Russia. However, the alliance is in the news these days thanks to growing support and appreciation of the economic potential of member countries. BRICS primarily seeks to improve trading relations between member countries, utilizing local currencies for trade instead of the USD. The UAE is reportedly among 20 countries interested in joining the BRICS alliance. The UAE joined the new BRICS New Development Bank (NDB) in 2021, further fueling reports of intense interest from the Arab country. The shift from dollarized currencies is becoming a reality by the day as many countries seek safer alternatives. Yet, the USD remains dominant in global markets and continues to impact trade even in the UAE. The oil and non-oil trades are settled in USD, but as more trading partnerships explore non-dollar alternatives, the impact of international trade settlements on local goods and services is diverse.