Could China’s “Petroyuan” Give Rise to a New World Energy Order?
December saw Chinese President Xi Jinping meeting the leaders of Saudi Arabia and other Gulf Cooperation Council (GCC) nations. During the meeting, Xi said Beijing had unveiled five “priority” areas regarding its ties with the Gulf countries for the future, such as the fulfillment of bilateral oil and gas transactions in the Chinese yuan rather than the U.S. dollar.
Xi urged the GCC countries — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates — to use the Shanghai Petroleum and Natural Gas Exchange to conduct yuan-based energy deals. Also, China and Saudi Arabia inked more than $30 billion in trade deals during the visit.
China’s plans to use the yuan in its oil trade with Gulf nations may lead to a new world energy order, with Xi’s trip signaling “the birth of the petroyuan,” showcasing China’s drive “to rewrite the rules of the global energy market,” based on a recent note from Credit Suisse analyst Zoltan Pozsar published in a U.K. newspaper.
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