Wall
Street is bracing for a potential shake-up as China is set to launch
its first-ever crude oil futures contract late March at the Shanghai
Futures Exchange.
The
move, which had been laid out in 2012 but faced delays over possible
market turbulence, could represent a bold step forward in China’s
rise as an economic superpower and global hegemon. The contracts will
be priced in China’s currency, the renminbi or yuan, marking the
birth of what many are calling the “petroyuan.”
Despite
pessimism over China’s currency shift in U.S. business
publications, the introduction of a petroyuan marks one of the most
significant bids to date by countries seeking to dump the U.S.
“petrodollar.” The move will also strengthen the ability of China
— the world’s top oil importer in the biggest oil-consuming
region on the globe — to determine the price of crude oil sold to
its neighbors. As a result, China may soon become the strongest
player in global crude markets.
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