Saturday, March 31, 2018

The third step in changing the landscape of dollar hegemony could be in China's future establishment of the Petroyuan

In just one week's time, the world's current energy structure was shattered by two major events that appear to forecast the beginning of the end for the unipolar Petrodollar system.

The first of course took place on Monday when China officially initiated a Yuan-denominated oil contract, which on its first day of trading surpassed one of the two largest oil markets in volume.

The second one is still in the works, but was announced nonetheless, and it involves talks between Russia and Saudi Arabia (OPEC) to potentially create a new energy cartel that would centered around Moscow rather than Riyadh.

Now a third event is shaping up that could occur as early as the second half of this year, and it involves China demanding that all oil it purchases be done in their own currency rather than through the use of dollars.

In its efforts to make its currency more international and break the U.S. dollar’s global dominance, China is in the early stages of preparing to paying for oil imports in yuan, Reuters reported on Thursday, quoting three people with knowledge of the issue. 
China could launch a pilot program to pay for oil in yuan as early as the second half of this year, two of Reuters’ sources said. Local regulators have asked a few financial institutions to get ready for pricing Chinese oil imports in yuan, the three sources at some of the financial institutions said. 
One of the sources speculated that China could begin the test with paying in yuan for the oil it imports from Russia and Angola, although the source said they had no details of anything so specific being discussed. – Oil Price

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