Can China break US Dollar dominance using Petro-Yuan?

The Chinese government announced plans to start a crude oil futures contract priced in yuan and convertible into gold. The contract will enable the country's trading partners to pay with gold or to convert yuan into gold without the necessity to keep money in Chinese assets or turn it into US dollars. The new benchmark will reportedly allow exporters, such as Russia, Iran or Venezuela to avoid US sanctions by trading oil in yuan.

The US West Texas Intermediate and European benchmark Brent have a joint daily turnover of more than two billion barrels or 20 times the total daily world oil demand. However, the US WTI oil standard is losing its role in the oil market, notes Saxo Bank.

China is the world’s biggest oil importer and the volumes of its imports are closely watched by market analysts to gauge the pace of oil demand growth, the key growth driver of the global oil market.

Oil—the world’s most actively traded commodity—has an annual trade worth $14 trillion, which is roughly equivalent to the value of the Chinese gross domestic product (GDP) in 2017, according to Reuters calculations.

The world’s top crude oil importer switching to yuan for oil payments could have potentially huge implications on global oil trade, on the internationalization of the yuan, and on the US dollar oil trade.

Since the dollar will no longer be needed to purchase oil, there won't be much need for all those dollars to be kept in international reserves. When countries dump their dollars, they will find their way back to America to fuel hyperinflation. It really is game over for America.

The worst thing for Yankistan is....soon nobody will take any more Fed Dollars....in the past, the Ameritards could plunder the world by making up fake dollars and basically would get the worlds resources and build up their own military for nothing. No more....Yankistan will slide now into a bankrupt 3rd world status, creating their own civil war....good night Ameritards.....and you won't even be invited to the party.

It is also alleged that Saddam wanted to introduce Euro to break the dominance of US Dollar; That was one of the other reasons, aside from bogus WMD claim, as to why he was deposed & hanged.

Russia now has Swift replacement online and China now doing this with oil, it is no wonder USA is beating war drums.

Death of US dollar? China launches petro-yuan to challenge greenback’s dominance

RT : 26 Mar, 2018

China's launch of yuan-backed oil futures has sparked huge interest among investors with initial trade volumes of the contracts outpacing overnight transactions of rival Brent crude – a globally recognized benchmark.

The first trading session saw a total of 62,500 contracts with more than 62 million barrels of crude traded for a notional volume of nearly 27 billion yuan ($4 billion), Zerohedge reports.

The new contract reportedly attracted foreign investors including Glencore and Trafigura, as well as Freepoint Commodities, BOCI Global Commodities and North Petroleum International. Domestic firms, including Unipec, Chinaoil, Cnooc, and Sinochem, as well as independent refiner Shandong Huifeng Petrochemical, also joined trading, which started on the Shanghai International Energy Exchange on Monday.

“We were active with Glencore today and I’ve seen Trafigura in it and Freepoint. We take the view that the contract is viable and adds to the crude oil trading value chain, and is here to stay,” Kevin Tan, executive vice president at Singapore-based brokerage Straits Financial Services, told Reuters.

The initial surge in trade volumes was followed by a gradual slowdown towards the end of the session. The contract closed at 429.9 yuan per barrel ($68.22).

“In the short-term, we believe price fluctuations will reflect domestic crude oil supply and demand. In the long run, yuan crude price will mirror the moves of Brent,” said Chen Tong, Shanghai-based senior crude analyst at First Futures, as quoted by the news agency.

According to some experts, the newcomer may challenge traditional rivals Brent and WTI, with the yuan expected to become a major reserve currency. However, some analysts expressed doubts over the petro-yuan's success, citing the fact that China is still not recognized as a market economy and the country’s authorities may interfere with trading at the first signs of a potential bubble.

China can succeed with petro-yuan where Gaddafi failed – killing the US dollar in oil trade

RT : 31 Mar, 2018

Muammar Gaddafi wanted to shatter the dominance of the greenback in the Middle East by introducing gold-backed dinar, but failed. China has a chance to finish what he started, one industry expert has told RT.

“Ideas related to oil trade in currencies other than the dollar arose more than once. Some of them were severely suppressed by the United States, one example is Muammar Gaddafi, who proposed the introduction of a regional currency gold dinar and trading oil in the Middle East in this currency,” Aleksandr Egorov, foreign exchange strategist at TeleTrade, told RT.

However, this time, an attempt to oust the dollar could be successful. China has launched oil futures backed by yuan, and Beijing has what Gaddafi didn’t, according to the expert.

“Along with the Chinese role in the global economy and the growing interest in the renminbi, China is also protected by a nuclear shield. It can afford to try to shatter the monopoly in oil trade. This will give even more weight to the Chinese yuan. In addition, China's economy is the world's largest consumer of oil, and consequently, all world producers of raw materials will have to reckon with the strategy of the Chinese authorities,” Egorov said.

According to the analyst, the timing for the launch of the petro-yuan is perfect. Key oil producers Russia, Iran and Venezuela are under pressure from US sanctions, and it is a good moment for them to ditch the dollar in oil trade and substitute it with the yuan.

Mikhail Mashchenko, an analyst at social network for investors eToro, agrees. “From the point of view of Russia's geopolitics, it is certainly beneficial to reduce the role of the dollar in foreign trade. And it has been done, let’s recall the record growth of the country's gold reserves. The other states that are constantly under the threat of new sanctions, like Iran and Venezuela, can profit, too. The contracts in RMB will allow to trade oil without US approval,” he told RT.

Both analysts agree that it will take time before the petro-yuan can become a real threat to the dollar. China needs to win the support of the world's largest oil producers Russia and Saudi Arabia, or the initiative is doomed, says Mashchenko. He added that the yuan is fully controlled by Beijing, which could also spook potential investors.

China's new oil benchmark crushing old-timer Brent

RT : 27 Mar, 2018

China's launch of yuan-backed oil futures has sparked huge interest among investors with initial trade volumes of the contracts outpacing overnight transactions of rival Brent crude – a globally recognized benchmark.

The first trading session saw a total of 62,500 contracts with more than 62 million barrels of crude traded for a notional volume of nearly 27 billion yuan ($4 billion), Zerohedge reports.

The new contract reportedly attracted foreign investors including Glencore and Trafigura, as well as Freepoint Commodities, BOCI Global Commodities and North Petroleum International. Domestic firms, including Unipec, Chinaoil, Cnooc, and Sinochem, as well as independent refiner Shandong Huifeng Petrochemical, also joined trading, which started on the Shanghai International Energy Exchange on Monday.

“We were active with Glencore today and I’ve seen Trafigura in it and Freepoint. We take the view that the contract is viable and adds to the crude oil trading value chain, and is here to stay,” Kevin Tan, executive vice president at Singapore-based brokerage Straits Financial Services, told Reuters.

The initial surge in trade volumes was followed by a gradual slowdown towards the end of the session. The contract closed at 429.9 yuan per barrel ($68.22).

“In the short-term, we believe price fluctuations will reflect domestic crude oil supply and demand. In the long run, yuan crude price will mirror the moves of Brent,” said Chen Tong, Shanghai-based senior crude analyst at First Futures, as quoted by the news agency.

According to some experts, the newcomer may challenge traditional rivals Brent and WTI, with the yuan expected to become a major reserve currency. However, some analysts expressed doubts over the petro-yuan's success, citing the fact that China is still not recognized as a market economy and the country’s authorities may interfere with trading at the first signs of a potential bubble.