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15-09-2022, 08:54 AM
By Simon Watkins - Sep 13, 2022, 5:00 PM CDT
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last week ......, Gazprom and China National Petroleum Corporation (CNPC) have agreed to switch payments for gas supplies to rubles (RUB) and renminbi (RMB) instead of dollars.
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China has also long been acutely aware of the fact that, as the largest annual gross crude oil importer in the world since 2017 (and the world’s largest net importer of total petroleum and other liquid fuels in 2013), it is subject to the vagaries of U.S. foreign policy tangentially through the oil pricing mechanism of the U.S. dollar. This view of the U.S. dollar as a weapon has been powerfully reinforced since Russia’s invasion of Ukraine and the accompanying U.S.-led sanctions that have followed, the most severe of which – as with sanctions on Iran from 2018 – relate to exclusion from use of the U.S. dollar. The former executive vice-president of the Bank of China, Zhang Yanling, said in a speech in April that the latest sanctions against Russia would “cause the U.S. to lose its credibility and undermine the [U.S.] dollar’s hegemony in the long run.”
Russia itself has long held the same view on the advantages for it of removing the U.S. dollar’s hegemony in global hydrocarbons pricing, but, while China was unwilling to overtly challenge the U.S. during the height of its Trade War under the highly unpredictable former U.S. President Donald Trump, it could do little about it on its own.
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This idea again resurfaced following the latest international sanctions imposed on Russia following its invasion of Ukraine. Almost as soon as they were introduced, Russian President Vladimir Putin signed a decree requiring buyers of Russian gas in the European Union (EU) to pay in rubles via a new currency conversion mechanism or risk having supplies suspended.
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Happily, for China, another leader of the Middle Eastern world (to add to Iran, which already utilises RMB and RUB trading) – Saudi Arabia - has shown very willing to expand its RMB-dominated business with China, including as payment for oil supplies.
......
Given that the vast majority of Saudi government borrowing (including large bond and syndicated loan facilities) in the previous few years has been denominated in U.S. dollars, a switch away from USD-funding would allowed Saudi more flexibility in its overall financing structure
Much much better to read the full article at: https://oilprice.com/Energy/Energy-Gener...rkets.html
......
last week ......, Gazprom and China National Petroleum Corporation (CNPC) have agreed to switch payments for gas supplies to rubles (RUB) and renminbi (RMB) instead of dollars.
......
China has also long been acutely aware of the fact that, as the largest annual gross crude oil importer in the world since 2017 (and the world’s largest net importer of total petroleum and other liquid fuels in 2013), it is subject to the vagaries of U.S. foreign policy tangentially through the oil pricing mechanism of the U.S. dollar. This view of the U.S. dollar as a weapon has been powerfully reinforced since Russia’s invasion of Ukraine and the accompanying U.S.-led sanctions that have followed, the most severe of which – as with sanctions on Iran from 2018 – relate to exclusion from use of the U.S. dollar. The former executive vice-president of the Bank of China, Zhang Yanling, said in a speech in April that the latest sanctions against Russia would “cause the U.S. to lose its credibility and undermine the [U.S.] dollar’s hegemony in the long run.”
Russia itself has long held the same view on the advantages for it of removing the U.S. dollar’s hegemony in global hydrocarbons pricing, but, while China was unwilling to overtly challenge the U.S. during the height of its Trade War under the highly unpredictable former U.S. President Donald Trump, it could do little about it on its own.
......
This idea again resurfaced following the latest international sanctions imposed on Russia following its invasion of Ukraine. Almost as soon as they were introduced, Russian President Vladimir Putin signed a decree requiring buyers of Russian gas in the European Union (EU) to pay in rubles via a new currency conversion mechanism or risk having supplies suspended.
......
Happily, for China, another leader of the Middle Eastern world (to add to Iran, which already utilises RMB and RUB trading) – Saudi Arabia - has shown very willing to expand its RMB-dominated business with China, including as payment for oil supplies.
......
Given that the vast majority of Saudi government borrowing (including large bond and syndicated loan facilities) in the previous few years has been denominated in U.S. dollars, a switch away from USD-funding would allowed Saudi more flexibility in its overall financing structure
Much much better to read the full article at: https://oilprice.com/Energy/Energy-Gener...rkets.html
