One has to wonder if the turmoil that is about to hit the Middle East because of President Trump’s recognition of Jerusalem as the capital of Israel is in part the catalyst leading China to begin live testing of their new Yuan-denominated oil contract this weekend. Because once it goes online in the Shanghai markets, the battle over future control of the Petrocurrency is on.
China’s moves to set up trading oil in yuan have sparked enthusiasm about what could be a shift in the global financial system: a reduced role for the U.S. dollar. Players like Adam Levinson, founder of hedge fund Graticule Asset Management Asia, call it a “huge story” to come.
But with policy makers prioritizing market stability over internationalization, plans laid back in 2012 to start oil-futures trading priced in yuan or dollars in Shanghai that year are still pending. The latest from the city’s International Energy Exchange: it’s coming soon, with test trades scheduled this weekend. – Bloomberg
If there is anything that could sway OPEC nations to dump the Petrodollar in favor of the Petroyuan, it is the U.S. getting even more involved in Middle Eastern geo-politics.