yuan for Oil

[Mega]

https://www.zerohedge.com/news/2018-...nstead-dollars

Ok, its a Zeroheadge story...............but anyone out there got any ideas on this?

[GRG55]

Re: yuan for Oil

Personally I think its a natural evolution and too many people are making too much of it.
Below a couple of charts that may be of interest. Check out the net imports curve and what has happened to US production, total imports, and imports from OPEC.

In the 1970s the USA was the world's most important market for foreign oil, and the USA was highly dependent on OPEC light, sweet crude in particular. Further, the oil exporting countries were much more dependent on the USA for both agricultural and finished goods imports (such as the then ubiquitous Chevrolet Caprice).

Those days are long gone. China is now a much more important market for oil exporters today. Chinese goods have proliferated in the former Soviet Union, Africa and the Persian Gulf. Forty years ago what would the oil exporters have done with Chinese currency? Today they can use it to trade for Chinese products and foodstuffs. The wealthy Arab sheikhs are not going to give up their Mercs and Bimmers to start buying Chinese cars quite yet, so I don't think the Euro or US$ is in any great danger.

[Mega]

Re: yuan for Oil

Thanks GRG, hope your well etc
Mike

Any one else

[jk]

Re: yuan for Oil

the u.s. has been able to print dollars [or borrow them back from foreign holders] to buy oil and other goods. the chinese want to be able to do that with the yuan. if an oil seller is skittish holding yuan they can turn around and convert it to gold at the market rate via the shanghai gold futures market. eventually they may feel relaxed enough to just hold yuan for a while.

i'm waiting to see if china makes a big investment in aramaco, in return for which the saudis would list aramco in hong kong, but more important allow their oil to trade on the yuan-based futures maket. the saudi product is noticeable in its absence from the list of crudes traded there at the moment. [russia already has a yuan/ruble-based deal with china.]

[GRG55]

Re: yuan for Oil

the u.s. has been able to print dollars [or borrow them back from foreign holders] to buy oil and other goods. the chinese want to be able to do that with the yuan. if an oil seller is skittish holding yuan they can turn around and convert it to gold at the market rate via the shanghai gold futures market. eventually they may feel relaxed enough to just hold yuan for a while.

i'm waiting to see if china makes a big investment in aramaco, in return for which the saudis would list aramco in hong kong, but more important allow their oil to trade on the yuan-based futures maket. the saudi product is noticeable in its absence from the list of crudes traded there at the moment. [russia already has a yuan/ruble-based deal with china.]

What I find interesting is the fact the Yuan or the Euro are NOT the recognized world reserve currency seems no deterrent in the present global financial environment to printing them in quantity as well...

[jk]

Re: yuan for Oil

i think that more and more there is no single global reserve currency. certainly the euro, and increasingly the yuan are serving as reserves as well.

going forward the question is whether the world devolves into 3 major currency zones, or whether there is agreement on something like the sdr, perhaps with a commodity and gold component. i don't think the latter could happen sooner than about 10-15years from now. it will take almost that long for u.s. politicians/bureaucrats/academics to recognize and then acknowledge that the dollar is no longer THE global reserve currency. and it may take a similar amount of time for china to dismantle capital controls.