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.