Saudi Arabia's decision to join SCO as a dialogue partner caused a significant development in Beijing's growing influence in the Middle East. The move also provides Saudi Arabia with the retaining role as the world's top oil exporter to China in 2022.

"With the emergence of China as a rising international power Riyadh does not want China's relations in the region to be limited to...Iran," said Najah al-Otaibi, a Saudi Policy Analyst to middleeasteye.net.

OPEC continues to decrease oil production

On other geopolitical and economical occurrences, OPEC has decided to reduce oil prices, causing global oil prices to increase while Saudi Arabia begins to seek alternatives to accommodate non-dollar oil trade, effectively ditching the petrodollar.

As reported by tvpwrold.com, Mohammed Al-Jadaan, Saudi Minister of Finance stated that Saudi Arabia is open to discussing oil trade settlements in currencies other than the US$.

"There are no issues with discussing how we settle our trade arrangements, whether it is in the US$, whether it is the Euro, whether it is the Saudi Riyal," said Al-Jadaan to Bloomberg TV.

As one of the top oil producers, Saudi announced surprising oil production cuts totalling up to 1.15 million barrels per day (bpd) from May until December 2023, as reported by apnews.com.

"You are in a market that is relatively balanced. You take a small amount away, depending on what demand does, you could have a very significant price response," Kevin Book, the Managing Director of Clearview Energy Partners LLC, as reported by apnews.com. 

Oil prices surged up to 6%

Recently, the world's oil prices surged up to 6% in March, after OPEC announced plans to cut oil production, making the total oil production cuts reach up to 3.66 million barrels per day (mbpd) or equivalent to 3.7% of the global demand.

As reported by Reuters, the price of Brent crude oil increased by US$ 5.04 (6.3%) to US$ 84.93 per barrel, while the West Texas Intermediate (WTI) crude oil rose US$ 4.75 (6.3%) to US$ 80.42 per barrel.

According to Bob Yawger, an analyst from Mizuho as reported by investor.id, OPEC explained that the oil production cut is a form of prevention due to the weakening of the economy and increasing oil stocks. In addition, economic sanctions against Russia caused Russia to seek new markets. However, it is predicted that prices of Brent crude oil will increase to about US$ 100 per barrel this year, which could cause an aggressive increase in interest rates from the central bank and could drive the economy closer to recession.

Faward Razaqzada, a market analyst from City Index as reported by investor.id, also stated that an increase of global economy inflation caused by the increase of oil prices will cause a surge in interest rates even further.

"People will not stop driving or travelling by plane because of high oil prices. Therefore, demand will only be affected moderately by rising oil prices," Razaqzada added.