Among the series of meetings that were held by China’s State Councilor and Foreign Minister Wang Yi with the foreign ministers of numerous middle eastern countries between January 10 and 15 in Wuxi, China, the most interesting perhaps for markets were his meetings with Saudi Arabia’s Faisal bin Farhan Al Saud on January 10, and with Iran’s Hossein Amir-Abdollahian on January 14.
In Wang’s meeting with Faisal, the two foreign ministers discussed China’s crude oil supplies, and agreed to hold a first ever China-Arab Summit in Riyadh in 2022 (see SGH 1/19/22, “China: Oil Imports and Mideast Politics”).
Our understanding is that the two foreign ministers also agreed to conduct a pilot scheme to promote the use of RMB/Riyal to settle bilateral payments “as soon as possible.” The goal, it was agreed, would be to ensure the partial settlement of crude oil transactions in RMB/Riyal, bypassing the US dollar, by 2025.
With Saudi Arabia and Iran seeking to normalize relations, Faisal also acknowledged China’s role in serving as a mediator between the two Mideast rivals.
After Wang’s meeting in turn on January 14 with Iran’s Abdollahian, both Beijing and Tehran touted the signing of a massive 25-year cooperation agreement to promote economic and political ties between the two countries (see also SGH 1/19/22). Lest Beijing’s intentions be unclear, an official in Beijing adds that China will make substantial investments in Iran in accordance with the agreement from this year, whether the US lifts sanctions on Iran or not.
Regarding those sanctions, Amir-Abdollahian also raised the topic of Iran’s ongoing nuclear talks with the “P4+1” with Wang and stressed that the US must lift “most of the sanctions against Iran, especially its crude oil exports,” otherwise Iran will not continue to negotiate.
Our understanding is that Wang committed China’s full support to Iran’s position and said that if the negotiations are to make progress, the US must “at least lift sanctions on Iranian crude oil exports” — a defined phrasing from both parties that could be interesting.