Amid the recent BRICS expansion and the bloc’s de-dollarization approach, the US and Europe may soon require local currencies in order to buy oil. Indeed, the past several months have proven the dominance of the oil market that is maintained by the alliance. Moreover, the trajectory of purchases shows the bloc may soon require a move away from the greenback.
Saudi Arabia has recently embraced a sharp cut in its oil exports. Specifically, the figure has reached a 28-month low. Moreover, Russia has embraced a voluntary supply cut of 1.3 million bpd. That figure equates to around 1% of global demand, presenting a move that could tighten the market and unveil a clear power dynamic.
Subsequently, oil-purchasing nations are rightfully concerned about the market tactics of both countries. Yet, the development could present a chance for the BRICS to forward their own currency agenda. A reality that could align with alliance-wide interest in working towards multipolar progress.
BRICS Bloc Could Require Local Currency Purchases in Oil Sector
The BRICS economic alliance has certainly made headlines throughout this year. Yet its most ambitious move was inviting six countries to join its economic alliance. Specifically, Saudi Arabia, Iran, the United Arab Emirates (UAE), Argentina, Egypt, and Ethiopia are set to join the bloc in 2024.
All the while, one clear motivation has been expressed by the alliance: the declining reliance on the US dollar. Now that the BRICS bloc has grown, the US and Europe may soon need local currencies to purchase oil.
Earlier this year, the UAE and India agreed to a landmark oil deal. Specifically, they would purchase oil in rupees, marking a clear turn away from the greenback. All the while, both Saudi Arabia and Russia have implemented voluntary oil cuts in production. The decision has many facets, but the global economic reaction points to the overall oil power of the bloc.
That power could be used in the motivation of a goal they have clearly expressed: de-dollarization. The global oil trade is set to be controlled primarily by the BRICS Alliance. A reality that could concern the US is how that power could be wielded. Specifically, altering the global reserve currency used to purchase one of the world’s most precious assets.