Ukraine-Russia crisis is driving countries to explore new ways of pricing oil, Qatar says

Qatar’s foreign minister has said the conflict in Ukraine, and its geopolitical ramifications, is pushing some countries to explore new ways of pricing oil — not in the dollar.

The comments, made Saturday by Mohammed bin Abdulrahman Al-Thani, come after a Wall Street Journal report that Saudi Arabia is in accelerated talks with China to accept yuan instead of dollars for oil that Beijing buys.

Speaking to Hadley Gamble at the Doha Forum, Al-Thani said he didn’t expect such a system to be introduced in the near term, but stressed that the economic consequences of the Ukraine war were hitting some countries hard.

“Honestly speaking, look at what happens and the dynamics around us right now. I’m sure there are a lot of other countries who are unhappy with what’s happened and the consequences of the Ukrainian-Russian crisis, especially the economic consequences,” he said.

“And they are going to look and explore a parallel system [of pricing oil] … going to hedge, at least, for them economically. So as we are living through a transition, this transition will not be only a political transition but it is an economic transition as well.”

Last week, Gal Luft, co-director of the Institute for the Analysis of Global Security, told CNBC the U.S.’ stinging economic penalties could push countries away from the dollar — the currency oil is typically priced in.

The sanctions include effectively freezing Russia’s central bank reserves and disconnecting Russia from the interbank messaging system, SWIFT.

“On the one hand, you are sanctioning right and left. On the other hand, you want countries to buy your Treasurys and finance your debt. That’s not a sustainable scenario,” Luft said.

Qatar’s Al-Thani also said the country was “stepping up” and holding talks with European countries about boosting gas supplies.

“We are stepping up and helping some European partners who are starting to suffer from some gas shortages … with the limited amount that we have,” he said, stressing that the majority of its gas contracts are long-term and so can’t be changed.

It comes as European countries seek to diversify their energy supply away from Russia – particularly gas. The EU imported 45% of its gas from Russia last year, according to the International Energy Agency.

On Friday, the U.S. said it was looking to provide at least 15 billion cubic meters more of liquified natural gas to Europe this year, with that amount set to increase going forward.

However Al-Thani said that no one energy supplier can substitute another.

“I think the best way forward is diversifying the source of supply,” he added. “This will be the only way forward. We are in discussion with a lot of other European countries right now, for new long-term contracts. And this discussion is just ongoing.”