Russian oil producers to make money from China’s yuan-backed crude futures – analysts

Latest news

    Crude oil exports implemented via Eastern Siberia–Pacific Ocean (ESPO) oil pipeline may substantially benefit from yuan-denominated oil futures launched by China last month, according to industry experts.

    If the new product manages to succeed, price pegging of the Russian ESPO export blend to the China contract will favorably influence the Russian oil blend price. The new futures contract may reportedly boost Russian producers’ annual revenues by extra $440 million.

    Read more

    Russia & China gradually ditching US dollar in favor of domestic currencies as trade booms

    Last year, China topped the US as the biggest oil importer with nearly a million barrels of crude being purchased every day. Chinese oil demand could increase by 2.1 million barrels per day by 2023, according to Wood Mackenzie consulting firm, as quoted by TASS. The analysts stress that Chinese authorities are clearly seeking to exert more influence on oil pricing in this regard.

    “Certainly, it is more beneficial for China to make settlements in the national currency. The national futures launch is a step in this direction. This instrument will make possible to form contracts on its basis and perform hedging,” Darya Kozlova from Vygon Consulting told the agency.

    “At current import volumes, the contract grades could account for trade of about 200 billion yuan ($31.9 billion). This will help the Chinese government in its efforts to internationalize renminbi,” said Wood Mackenzie’s research director Sushant Gupta.

    The new product encourages foreign investment in Chinese assets. China’s Finance Ministry even pledged to exempt nonresidents investing into the contract from taxes for up to three years.

    “However, if the government continues market interventions, while control measures over capital flow will be tightened, this will only discourage investors,” notes Ekaterina Grushevenko, an expert from the Skolkovo Business School.

    Analysts say that Beijing is on its way to creating its own oil benchmark as seven different blends accounting for just 20 percent of total imported volumes are currently authorized for trading.

    “Creation of liquid futures is a lengthy and complex yet feasible process, as Dubai’s experience shows. A fairly liquid exchange market is an advantage for China, which is important for benchmark forming” said Kozlova.

    View the original article: https://www.rt.com/business/424192-russian-producers-benefit-china-futures/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

    For more stories on economy & finance visit RT’s business section

    In the same category are

    More Croats watched World Cup semi with England than historic first-ever final – FIFA World football governing body FIFA released figures showing that fewer Croatian football fans tuned in to watch the nation’s first ever World Cup fina...
    White House says Trump was answering different question when he said Russia wasn’t targeting US When he appeared to claim that Russia was no longer a threat to US, Donald Trump was actually saying that he would not field the question asked, White...
    Trump discussed Russia’s proposal to question McFaul, Browder, made no commitments – White House The White House remained non-committal on the Russian proposal to allow investigators from both countries to question suspects under a 1999 treaty, wh...
    Your first-ever childhood memory could be fake news, new research reveals It turns out your first-ever memory could be a lie - researchers have discovered that a staggering 38 percent of first memories are purely fictional. ...
    Peaceful multicultural societies don’t exist, Dutch FM says in explosive leaked speech Peaceful multicultural societies don’t exist and the EU won’t be able to force “equal” migrant distribution on Eastern Europe, where colored people ar...
    Entertainer takes swing at ‘PC culture’ as Punch & Judy gets boot for domestic violence A veteran children’s entertainer has hit out at the “PC brigade” after his ‘Punch and Judy’ shows were axed. A school and local council are understood...

    Leave a comment

    Your email address will not be published. Required fields are marked *

    This site uses Akismet to reduce spam. Learn how your comment data is processed.