• 4 minutes Oil Price Editorial: Beware Of Saudi Oil Tanker Sabotage Stories
  • 6 minutes UAE says four vessels subjected to 'sabotage' near Fujairah port
  • 9 minutes Why is Strait of Hormuz the World's Most Important Oil Artery
  • 13 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 3 hours California's Oil Industry Collapses Despite Shale Boom
  • 4 hours Knock-Knock: Aircraft Carrier Seen As Barometer Of Tensions With Iran
  • 9 hours The Consequences: Full-Blown Trade War Will Push World Towards Recession
  • 3 hours Will Canada drop Liberals, vote in Conservatives?
  • 4 hours UK Needs New Wind Turbines
  • 9 hours IMO2020 To scrub or not to scrub
  • 26 mins Shale to be profitable in 2019!!!
  • 10 hours Did Saudi Arabia pull a "Jussie Smollett" and fake an attack on themselves to justify indiscriminate bombing on Yemen city population ?
  • 12 hours Global Warming Making The Rich Richer
  • 12 hours California Threatens Ban on ICE Cars
  • 11 hours Greenpeace Blocks BP HQ
  • 6 hours Wonders of Shale- Gas,bringing investments and jobs to the US
  • 4 hours methanol fuel cells
  • 6 hours Apartheid Is Still There: Post-apartheid South Africa Is World’s Most Unequal Country
  • 6 hours Australian Voters Reject 'Climate Change' Politicians
  • 10 hours 6 Ways to Fight Climate Change
On The Cusp Of War: Why Iran Won’t Fold

On The Cusp Of War: Why Iran Won’t Fold

Iran’s Supreme Leader Ayatollah Khamenei…

Hedge Fund: China’s Petro-Yuan Plan Could Upend Oil Markets

China

China launching a yuan-denominated oil futures contract by the end of this year will shock those investors who have not been paying attention to the Chinese plans, Adam Levinson, managing partner and chief investment officer at hedge fund manager Graticule Asset Management Asia (GAMA), told Bloomberg Television on Tuesday.

In July, the Shanghai International Energy Exchange, INE, a subsidiary of Shanghai Futures Exchange, completed a four-step trial in crude oil futures denominated in yuan and said that it would carry preparatory works for the listing of crude oil futures, and would try to launch the contract by the end of this year.

This would be a “wake up call” for traders and investors who haven’t been paying attention to Chinese plans to create the so-called petro-yuan and shift oil trade out of petrodollars, according to Levinson.

The yuan-priced oil contract will be a kind of a hedging tool for Chinese firms, Levinson told Bloomberg. The yuan crude futures contract will also help the Chinese in their push to make their currency more international and widely used in global trade settlements, Levinson noted.

In addition, the fund manager expects Chinese oil firms to be key investors in the upcoming IPO of 5 percent in Saudi Arabia’s oil crown jewel, Saudi Aramco.   

In its bid to establish the petro-yuan, China is now trying to persuade OPEC’s kingpin and biggest exporter, Saudi Arabia, to start accepting yuan for its crude oil. If the Chinese succeed, other oil exporters could follow suit and abandon the U.S. dollar as the world’s reserve currency. Pulling oil trade out of U.S. dollars would lead to decreased demand for U.S. securities across the board, Carl Weinberg, chief economist and managing director at High Frequency Economics, tells CNBC.

Weinberg believes that the Chinese will “compel” the Saudis to accept to trade oil in yuan.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment
  • Naomi on October 25 2017 said:
    Saudis will be selling Yuan to buy dollars. Either the Yuan loses value of the price of oil falls. Saudis need to buy food. China does not export much food.
  • Bill Simpson on October 24 2017 said:
    Price everything on a currency which isn't free floating. Sure, that's going to happen. No risk there, right?

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News