Measurement and Testing

  • What Is Petro Yuan?

What Is Petro Yuan?

Sep 19 2018 Read 944 Times

In a bid to combat the longstanding hegemony of the US dollar, China has introduced a new standardised futures contract available to trade on the Shanghai International Energy Exchange. The People's Republic is optimistic that the arrival of Petro Yuan, which relies on crude oil as an underlying asset, will usher in a new era for the international energy industry. It's the first time the market has seen futures contracts priced in Chinese yuan, with analysts predicting it could pose a serious threat to the enduring dominance of the US dollar.

China aims for global benchmark

Currently, China is the world's biggest oil importer, purchasing around nine million barrels a day. The introduction of Petro Yuan is part of a plan to reshape the energy industry and use local currency to trade one of the world's most coveted commodities. Eventually, China hopes to cement its yuan-priced oil futures contract as a global crude benchmark that stands alongside Brent and WTI.  

"The goal is for China to establish an Asian benchmark that will reflect Chinese consumption and more broadly Asian demand patterns", explains Michal Meidan, Asia analyst for market consulting services group, Energy Aspects. "For now, it doesn't mean many changes. Oil is still going to trade in the US dollar, but increasingly over time, there will be more transactions ... but this is not a gamechanger, yet."

Critics slam Petro Yuan as a "fantasy"

China is expecting to receive its first Petro Yuan oil delivery in September, with five companies on track to deliver 600,000 barrels of Middle Eastern crude to local buyers in the People's Republic. Unipec will be supplying one of the biggest deliveries, with roughly 200,000 barrels of Iraqi grade Basra Light bound for storage tanks on an island near Zhejiang. CNPC Fuel Oil and Zhenhua Oil are also onboard, with plans to deliver 100,000 barrels of Basra Light to a Zhanjiang storage farm operated CNPC Fuel Oil.

Not everyone is as buoyant, with critics flagging Chinese storage costs as a major challenge for delivering Petro Yuan oil futures contracts. Others have slammed the Petro Yuan as a "fantasy" that will fail to gain traction and quickly fizzle out, leaving the US petrodollar to continue its reign.

While crude is still a hot commodity, clean energy is quickly making its mark. Spotlighting the rapidly growing renewables sector, 'Lubrication of Wind Turbines is Anything but a Breeze' explores the challenges associated with making the switch.

Read comments0

Do you like or dislike what you have read? Why not post a comment to tell others / the manufacturer and our Editor what you think. To leave comments please complete the form below. Providing the content is approved, your comment will be on screen in less than 24 hours. Leaving comments on product information and articles can assist with future editorial and article content. Post questions, thoughts or simply whether you like the content.


Digital Edition

Petro Industry News Buyers Guide 2019

February 2019

In this edition Fuel for Thought - Changes on the Endress + Hauser Executive Board - Yokogawa signs strategic partnership and equity agreement with AlgaEnergy - NEFTEGAZ in Moscow provides...

View all digital editions

Events

ChemTech World Expo 2019

Feb 20 2019 Mumbai, India

WaterEx World Expo 2019

Feb 20 2019 Mumbai, India

Refining & PetroChemicals 2019

Feb 20 2019 Mumbai, India

EUEC 2019

Feb 25 2019 San Diego, CA, USA

International Petroleum Week

Feb 26 2019 London, UK

View all events