China’s petro-yuan thundering into action as Iran ditches US dollar in oil trade

Tehran – Washington’s renewed sanctions on Tehran supports China’s newly established oil futures, analysts say. The sanctions can make the yuan a more preferable currency than the dollar on the oil market.

Since their launch in May, the interest in the renminbi-backed oil contracts has steadily surged. Traded daily volumes hit a record 250,000 lots last Wednesday, and the share of yuan contracts in global trading jumped to 12 percent compared to eight percent in March.

“The contract is thundering into action,” said Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA in Singapore, as quoted by Reuters. “It makes sense for Iran to begin selling oil under contracts denominated in yuan rather than dollars.”

China is the largest oil consumer in the world and also buys the most from Iran, a major OPEC producer. Beijing buys 25 percent of Iranian oil exports, which accounts for eight percent of its needs.

“The sanctions… can potentially accelerate this process of establishing a 3rd (oil) benchmark,” said senior vice president for derivatives in Singapore at financial services firm INTL FCStone, Barry White.

By using more yuan in the oil trade, Beijing both saves the costs of exchanging dollars and promotes the renminbi as a global currency, analysts say. Last week, Shanghai futures rose to a dollar-converted record high of around $75.40 per barrel, growing faster than rival benchmarks Brent and WTI.

"Monitoring Desk"

RELATED POSTS

244
Pakistan-Indonesia trade relations will expand in future: RCCI
CIIE highly successful in boosting trade with Pakistan, says China
Pakistan to hold policy-level talks with IMF this week
CPEC: Wind, solar energy production to double by 2022
PTI govt likely to decrease profit margins for power plant owners
Sindh Engro seeks reduction in returns on energy projects
Private sector to be engaged in CPEC projects: Asad Umar
Govt gets Chinese loan for four CPEC projects
For CPEC, investors urge political unity
Pakistan needs to make CPEC an engine of innovation
Rules being finalised for Naya Pakistan Housing project
Tajikistan keen in promoting trade with Pakistan
Pakistan and China in talks to finalise co-operation modalities
Pakistan, China can play vital role in regional progress
‘Pakistan will learn from China’: Imran Khan on anti-poverty plan

FOLLOW US


About Corridor.pk

Corridor.pk is Pakistan’s leading regional connectivity media & communication/outreach platform, dedicated to profiling and promoting the business activities, news and views on the regionally connected business corridor across OBOR. 

     

Addional Information

 Ethics Policy     Advertise
 Terms & Conditions
 Contact Us