China to dump the US dollar in oil trade

China to dump the US dollar in oil trade

China is one of the world’s largest oil buyers. Nearly 60 percent of its oil consumption comes from imports.

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HANG THE BANKERS

China is planning to launch its own oil benchmark in October, similar to Brent and WTI, striving for a more important role in establishing crude prices.

Unlike the Western benchmarks, the Chinese contracts will be nominated in the yuan, not the US dollar.

Shanghai International Energy Exchange sent a draft futures contract to market players in August, Reuters reported quoting sources.

Oil futures will be the first Chinese contract to permit direct participation of foreign investors. However, this is not the first step for greater oil market openness in China. In July, Beijing allowed private companies to import crude. Previously importing was only done by state-run majors such as Sinopec, China National Petroleum Corporation and China National Offshore Oil Corporation, the Xinhua news agency reported.

China-crude-oil-yuan

A Shanghai-based contract will compete in the crude futures market, which is worth of trillions of dollars and is dominated by two contracts, London’s Brent, seen as the global benchmark, and WTI, the key U.S. price.

North Sea, Brent oil was first developed in the 1970s. The ICE Brent futures contract was developed in 1988. With an approximate output of only 1 million barrels per day, this blend is considered a benchmark and its contracts are now used to set prices for roughly 2/3 of the world’s oil.

China is one of the world’s largest oil buyers. Nearly 60 percent of its oil consumption comes from imports.

SEE ALSO: Putin drafts bill to dump the dollar and euro

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CrossTalk: China finally arrives on world stage?

2 COMMENTS

  1. China has not engaged the rest of the world in military confrontation, colonialist adventurism and wars while establishing itself on the world stage. Perhaps they have learned something from Western History (or the failures of), or the teachings of Confucius. I suspect the latter, for they have not done very well when practicing the forceful and brutal ways of the West.

    They are on a roll, and it looks like they will get there, and probably stay there, for some time to come.

    We are living in changing times, and the times are changing at an ever increasing exponential rate!

    The inevitability of this World power, Sooperpower, snooper power, a rose by any other name….we could deny their existence, and say whatever we like, but whenever an elephant moves into your tent he sooner or later, will make his presence known to a degree which becomes hard to ignore.

  2. A single power that controls the resources of Eurasia would be an unstoppable global superpower. China, Russia, and others are working on an ambitious plan. They seek to make US dominance of the seas unimportant. They’re tying Eurasia together with a web of land-based transport facilities. A constellation of supporting organizations for financial, political, and security cooperation is also in the works. If they’re successful, they’ll wipe away hundreds of years of geopolitical strategic thinking. They’ll make the current US planning paradigm obsolete. They’ll undermine the strategy that the US – and the UK before it – has relied on to dominate geopolitics. It would be the biggest shift in the global power balance since WWII.

    It’s a game for the highest stakes…a real-life battle of Risk. The effort and countereffort to integrate Eurasia is the new Great Game. It’s the most important process to watch for the next 10 years.

    The central project to integrate Eurasia is the New Silk Road.

    Read the full story here:

    http://safehaven.com/article/38861/the-most-impor

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