Good morning, here's what the Oilman has for you today:

• Saudi Signals New Step to Dedollarization

• The Sad Tale of Europe’s EV Makers

• Tweet of the Day

Saudi Signals New Step to Dedollarization

Saudi Arabia has signaled it was open to selling oil in yuan and not dollars.

If the signal is followed by action, it could have huge implications.

After all, the greenback is largely the world’s reserve currency, thanks to the petrodollar.

“Open to new ideas”

For now, there is nothing concrete.

The Saudi industry ministry made a comment about being open to new ideas.

He made it in an interview with South China Morning Post.

And said, “The Petroyuan is not substantial to [the ministry]…”

“…but I think Saudi Arabia will always try new things and is open to new ideas.”

The Saudis have already demonstrated that.

This is not the first time they have signaled they are open to trade in yuan.

If only to reduce dependence on the dollar…

Which has been overused as a sanctioning tool.

It was a matter of time before countries saw the risk.

And that is why you shouldn’t overdo sanctions.

If you do, you get de-dollarization.

A fifth of global trade in local currencies

Last year, 20% of global trade was done in non-dollar currencies.

“The U.S. dollar is getting some competition in commodities markets,” the head of JP Morgan’s commodities team said at the time.

Natasha Kaneva noted that fear of sanctions was one driver of that.

The other was China, seeking to make its currency international…

And succeeding.

In November last year, the yuan replaced the yen as fourth world currency.

De-dollarization is happening. It’s happening slowly. For now.

The Sad Tale of Europe’s EV Makers

EV sales in Europe last month dropped by 33%.

It’s probably more accurate to call it a plunge.

However, global EV sales were strongly up in the same month.

It’s a sad, sad tale of costs.

The impossible catch-up

Global EV sales rose by 20% in August.

Because Chinese EV sales added 42%, let’s call it a surge.

The Chinese have been developing their EV tech for decades.

That’s how long it took them to make them affordable.

And reliable enough to create demand.

Well, all that and lots of subsidies.

European carmakers only started working on EVs when regulators threatened fines.

Emissions need reduction and all that.

But subsidy money has been tight lately.

Germany scrapped them altogether.

And the carmakers are nowhere near Chinese costs.

So sales are down… and so is market share.

Because the Chinese are coming to Europe, they are coming with cheap EVs.

It’s going to get a lot worse

All the big auto names in Europe have seen their market share fall this year.

EVs are one reason.

Chinese EVs are another reason.

Then there are hybrids.

People are reorienting themselves from EVs to hybrids.

Which, let’s be honest, makes a lot more sense.

And European carmakers have to catch up once again.

With no billions in subsidies.

Those are going to wind and solar developers.

There are not enough billions to go around.

It’s a tough time to be a carmaker in Europe right now.

Tweet of the Day

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